FRG - Audit Report / Information 2019

(English Translation of Parent Company Only Financial Statements and Report Originally Issued in Chinese)

Formosan Rubber Group Inc. Parent Company Only Financial Statements and Independent Auditors’ Report 2019 and 2018

Address: 8F, No. 82, Sec. 1, Hankou St., Zhongzheng District, Taipei City Tel No.: (02) 2370-0988

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

INDEPENDENT AUDITORS’ REPORT

NO.00111080EA

To: Formosan Rubber Group Inc.

Opinions

We have audited the accompanying parent company only balance sheet of Formosan Rubber Group Inc. as of December 31, 2019 and 2018 and the parent company only comprehensive income statement, statement of changes in equity, statement of cash flows and notes to the parent company only financial statements (including summary of material accounting policies) for the January 1 to December 31, 2019 and 2018.

According to the opinion of this CPA, based on our CPA’s audited result, the major aspects of the accompanying parent company only financial statements as stated in the above are prepared in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards, International Accounting Standards, interpretations as well as interpretation announcements recognized and announced effective by the Financial Supervisory Commission, sufficiently expressing the financial status of Formosan Rubber Group Inc. as of December 31, 2019 and December 31, 2018, and it’s parent company only financial performance and it’s parent company only cash flow of from January 1 to December 31, 2019 and 2018.

Basis of opinion

We have conducted the audit in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and the generally accepted auditing standards. With our responsibility under such regulations and standards, we will further explain the responsibility of our audit of the financial statements. The personnel ruled with independence in the accounting office of the certified public accountant (CPA) have followed the Norm of Professional Ethics for Certified Public Accountants to stay impartial and independent from Formosan Rubber Group Inc., and carry out other responsibilities required by the Rules. We believe that we have obtained sufficient and pertinent audit evidence, which provides the basis of our audit opinions.

Key audit matters

The key audit item refers to the most crucial element of our professional judgment about the audit conducted for the 2019 the parent company only financial statements of Formosan Rubber Group Inc. The item has been reflected in our overall audit of the parent company only financial statements and in the process to form our audit opinions, in which we do not individually express our opinion on the item.

Below is the list of key audit issues on the 2019 the parent company only financial statements of Formosan Rubber Group Inc.:

Valuation of Net Realizable Value of Real Estate For Sale and Real Estate Under Construction

Summary of key issues for auditing

As of December 31, 2019, the value of real estate for sale and real estate under construction on the parent company only balance sheet was NT$ 4,305,695 thousand primarily reflective of the completed properties and land held for sale and the land cost with constructions in progress. These items accounted for approximately 33% of the parent company only total assets. Please refer to Notes 4, 5 and 11 of the parent company only financial statements for detailed information. Formosan Rubber Group Inc. uses the lower of the cost or net realizable value for the valuation of real estate for sale and real estate under construction. As the valuation of real estate for sale and real estate under construction is subject to the effects of the cycle in the real estate market and the changes of the government policy and the determination of net realizable values for real estate for sale and real estate under construction requires major judgment and estimates, it was listed as one of the audit priorities this year. Audit procedures

The audit procedures were carried out by CPAs as follows:

Acquisition of the data concerning the company’s assessment of lower of the costs and net realizable value;
Random inspection of the ownership documents for the properties held for sale and the land on which construction was in progress, in order to validate the integrity of the assessment;
Random inspection of the data concerning the estimated selling price and the sale records of the most recent period, so as to determine the basis and reasonability of the management’s estimate of net realizable value.

Impairment of Property Investments

Summary of key issues for auditing

As of December 31, 2019, the value of property investments on the parent company only balance sheet was NT$2,763,300 thousand accounting for approximately 21% of the parent company only total assets. Please refer to Notes 4, 5 and 16 of the parent company only financial statements for detailed information. Management complies with IAS 36 “Impairment of Assets” by evaluating whether there are any signs indicating the investment properties may be impaired on each balance sheet date. Given the numerous assumptions involved, and the high uncertainty of accounting estimates, it was listed as one of the audit priorities this year.

Audit procedures

The audit procedures were carried out by CPAs as follows:

Acquisition of the data concerning the company’s assessment of asset impairments according to cash generating units;
Assessment of the reasonability of the management’s identification of impairment signs, assumptions and estimates used, such as the division of cash generating units, forecasting of cash flows, the appropriateness of the discount rate.

Responsibility of the management and governance unit for the parent company only financial statements

The responsibility of the management is to prepare the adequately expressed financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), interpretations as well as interpretation announcements recognized and announced effective by the Financial Supervisory Commission, and maintain the internal control required by the preparation of the parent company only financial statements, so as to ensure that the parent company only financial statements do not have any material misstatement resulting from corruption or errors.

Unless that the management plan to liquidate Formosan Rubber Group Inc. or stop the business or there are no other practical and feasible measures except liquidation or business closure, the responsibility of the management for preparing the financial statements includes assessment of Formosan Rubber Group Inc.’ competence in continuing business operation, disclosure of relevant items and adoption of the business continuation accounting basis.

The governance unit (including the supervisors) of Formosan Rubber Group Inc. is liable to supervise the financial reporting process.

Auditor’s responsibilities for the audit of the parent company only financial statements

The purpose of our audit of the parent company only financial statements is to obtain reasonable assurance about whether any material misstatement resulting from corruption or errors is existent in the overall the parent company only financial statements, and issue the audit report. The reasonable assurance referred to here is a high degree of assurance. Nevertheless, the audit executed in accordance with the generally accepted auditing standards cannot guarantee that the material misstatement existing in the parent company only financial statements can be detected. A misstatement may result from errors or corruption. If the individual amount or compiled amount of a misstatement can be reasonably expected to impact the economic policy made by the user of the parent company only financial statements, it shall be regarded as a material factor.

When conducting the audit according to the generally accepted auditing standards, we used our professional judgment and kept professionally doubtful about dubious things. We also executed the following tasks:

Recognize and assess the risk of the material misstatement resulting from corruption or errors; design and take the appropriate coping strategy for the assessed risk; obtain sufficient and pertinent audit evidence as the basis of the audit opinions. Given that corruption may involve conspiracy, falsification, deliberate omission, misstatement or transgression of the internal control, the risk in the failure in detecting the material misstatement resulting from corruption is higher than that resulting from errors.
Understand the necessity for obtaining the internal control associated with the audit, so as to design the audit procedure appropriate under the condition at the time. However, the purpose of it is not to express the opinion on the efficacy of Formosan Rubber Group Inc.’ internal control.

Assess the propriety of the accounting policy adopted by the management and the rationality of the accounting estimation and relevant disclosures.
Conclude if the business continuation accounting basis adopted by the management is proper, and whether the material doubtful event or circumstance likely incurred from the competence of Formosan Rubber Group Inc.’ continuing business operation has any material uncertainty according to the acquired audit evidence. If we consider material uncertainty existent in such event or circumstance, we shall remind the user of the parent company only financial statements to pay attention to the relevant disclosures of the parent company only financial statements through our audit report, or modify the audit opinion when such disclosures are not applicable. Our conclusion is made according to the audit evidence acquired until the audit report day. However, the development of future events or circumstances is also likely to bring about Formosan Rubber Group Inc.’ incompetence to continue its business operation.
Assess the overall representation, structure and content of the parent company only financial statements (including the relevant notes) and check if the related transactions and events are adequately represented in the parent company only financial statements.
Acquire sufficient and pertinent audit evidence from the financial information of individual entities composed in the Formosan Rubber Group Inc., so as to express opinions on the parent company only financial statements. We are responsible for the guidance, supervision and execution of the Group’s audit cases, and form the Formosan Rubber Group Inc. audit opinions.

The items communicated between us and the governance unit cover the planned audit scope and time and material audit findings (including the significant defects of internal control recognized in the audit process).

We also provide the governance unit with the fact that the personnel of our office who have been required for audit independence have complied with the parent company only statement stipulated in the Rules of Professional Ethics for Certified Public Accountants of the Republic of China, and communicated with the governance unit for any relations which are likely considered to impact CPA’s independence and other items (including relevant protection measures).

According to the items communicated with the governance unit, we have determined the key item of our audit of Formosan Rubber Group Inc.’ 2019 the parent company only financial statements, in which we have described the item in our audit report. Except for the specific items which are not allowed to be publicly disclosed as prescribed by laws and regulations or under a rare situation, we have decided not to communicate specific matters in our audit report because we have reason to believe that the negative influence of the communication is greater than the positive influence on the public interest.

BAKER TILLY CLOCK & CO.

March 20 , 2020

Notes to Readers

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

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

Formosan Rubber Group Inc.

Parent Company Only Balance Sheet

Dec. 31, 2019 and 2018

		Unit: In Thousands of NTD	Unit: In Thousands of NTD	Unit: In Thousands of NTD	Unit: In Thousands of NTD
Assets	Note	Dec. 31, 2019		Dec. 31, 2018
Accounting item		Amount	％	Amount	％
Current assets Cash and cash equivalents Financial assets at fair value through profit or loss-current Financial assets at fair value through other comprehensive income - current Notes receivable, net Accounts receivable, net Other receivables Current tax assets Inventories Real estate for sale and real estate under construction Prepayments Other financial assets-current Other current assets-other Non-current assets Financial assets at fair value through other comprehensive income - non-current Investments accounted for using equity method Property, plant and equipment Right-of-use assets Investment property, net Deferred tax assets Prepayments for equipment Refundable deposits Other financial assets - non-current Other non-current assets, others	6 7 8 9 9 10 11 12 8 13 14 15 16 27 12	$ 7,927,109	61	$ 9,366,898	66
		900,150 － 2,123,296 35,082 92,861 1,044 9,751 257,247 4,305,695 35,667 165,214 1,102	7 － 17 － 1 －－ 2 33 － 1 －	735,031 16,041 1,977,739 30,895 151,188 9,512 － 439,322 5,306,792 64,821 634,359 1,198	5 － 14 － 1 －－ 3 38 － 5 －
		5,050,381	39	4,754,931	34
		109,791 1,173,434 891,585 46,717 2,763,300 34,090 822 8,322 20,000 2,320	1 9 7 1 21 －－－－－	143,312 793,536 942,204 － 2,820,247 20,630 48 11,384 20,828 2,742	1 6 7 － 20 －－－－－
Total assets		$ 12,977,490	100	$ 14,121,829	100

(The attached notes constitute a part of the parent company only financial statements.)

Formosan Rubber Group Inc.

Parent Company Only Balance Sheet (Continued)

Dec. 31, 2019 and 2018

		Unit: In Thousands of NTD	Unit: In Thousands of NTD	Unit: In Thousands of NTD	Unit: In Thousands of NTD
Liabilities & equity	Note	Dec. 31, 2019		Dec. 31, 2018
Accounting item		Amount	％	Amount	％
Current liabilities Short-term borrowings Short-term notes and bills payable Contract liabilities Notes payable Accounts payable Other payables Current tax liabilities Lease liabilities-current Other current liabilities Non-current liabilities Deferred tax liabilities Non-current lease liabilities Net defined benefit liability Guarantee deposits received Credit balance of investments accounted for using equity method Total liabilities Share capital Capital surplus Retained earnings Legal reserve Special reserve Unappropriated retained earnings Other equity interest Exchange differences on translation of foreign financial statements Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income Treasury stocks Total equity	17 18 11、21 31 15 27 15 19 13 20 20 20 20 20	$ 1,912,550	15	$ 3,536,961	25
		860,000 399,548 395,698 87,820 20,144 126,725 － 5,281 17,334	7 3 3 1 － 1 －－－	2,020,000 719,643 456,955 123,610 45,126 146,463 7,359 － 17,805	14 5 3 1 1 1 －－－
		258,301	2	224,936	2
		166,455 41,688 3,688 42,401 4,069	1 －－ 1 －	169,805 － 6,728 44,361 4,042	1 －－ 1 －
		2,170,851	17	3,761,897	27
		3,500,000	27	3,700,000	26
		466,463	4	492,836	3
		6,672,834	51	6,473,080	46
		1,526,788 358,637 4,787,409	12 2 37	1,505,207 319,584 4,648,289	11 2 33
		167,342	1	(44,611)	－
		(7,448) 174,790	－ 1	1,392 (46,003)	－－
		－	－	(261,373)	(2)
		10,806,639	83	10,359,932	73
Total liabilities & equity		$ 12,977,490	100	$ 14,121,829	100

(The attached notes constitute a part of the parent company only financial statements.)

Formosan Rubber Group Inc.

Parent Company Only Comprehensive Income Statement

From Jan. 1 to Dec. 31, 2019 and 2018

Unit: In Thousands of NTD

Accounting item	Note	2019		2018
		Amount	％	Amount	％
Operating revenue Operating costs Gross profit Operating expenses Selling expenses General and administrative expenses Research and development expenses Expected credit impairment (loss) gain Operating profit Non-operating income and expenses Other income Other gains and losses Finance costs Shares of profit (loss) of subsidiaries and associates Income before income tax Income tax (expense) profit Net income Other comprehensive income Items that will not be reclassified subsequently to profit or loss Remeasurements of defined benefit plans Unrealized gains (losses) on valuation of investments in equity instruments measured at fair value through other comprehensive income Shares of other comprehensive (loss) income of subsidiaries and associates Income tax benefit related to items that will not be reclassified subsequently Items that may be reclassified subsequently to profit or loss Exchange differences arising on translation of foreign operations Unrealized gains (losses) on available-for- sale financial assets Unrealized loss on valuation of investments in debt instruments measured at fair value through other comprehensive income Shares of other comprehensive (loss) income of subsidiaries and associates Income tax related to items that may be reclassified subsequently Total comprehensive income for the year Earnings per share (NT dollars) Basic earnings per share Diluted earnings per share	21 22 23 24 25 27 19 27 27 28	$ 2,701,837 (2,040,089)	100 (76)	$ 1,373,878 (1,043,338)	100 (76)
		661,748 (234,831)	24 (8)	330,540 (226,719)	24 (16)
		(92,754) (130,536) (13,097) 1,556	(3) (5) －－	(88,779) (128,201) (13,056) 3,317	(6) (9) (1) －
		426,917	16	103,821	8
		123,093	4	156,948	11
		144,500 (34,290) (19,630) 32,513	5 (1) (1) 1	155,402 9,492 (21,870) 13,924	11 1 (2) 1
		550,010 (11,053)	20 －	260,769 (44,967)	19 (3)
		538,957	20	215,802	16
		184,067	7	(33,634)	(3)
		177,251	7	(44,031)	(3)
		2,542 55,676 119,490 (457)	－ 2 5 －	(3,690) (77,627) 31,298 5,988	－ (5) 2 －
		6,816	－	10,397	－
		(11,050) － 19,570 － (1,704)	－－－－－	4,666 － 2,662 － 3,069	－－－－－
		$ 723,024	27	$ 182,168	13
		$ 1.54 $ 1.54		$ 0.59 $ 0.59

(The attached notes constitute a part of the parent company only financial statements.)

Formosan Rubber Group Inc.

Parent Company Only Statement of Changes in Equity

From Jan. 1 to Dec. 31, 2019 and 2018

									Unit: In Thousands of NTD	Unit: In Thousands of NTD
Item	Capital	Capital surplus		Retained earnings		Otherequityinterest			Treasury stocks	Total equity
			Legal reserve	Special reserve	Undistributed earnings	Exchange differences on translation of foreign financial statements	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income	Unrealized gains (losses) on available-for- sale financial asset
Balance ofJan.1,2018	$ 3,800,000	$ 506,026	$ 1,486,283	$ 498,725	$ 4,527,616	$ (2,428)	$ －	$ 22,951	$ (1,332)	$ 10,837,841
Effects of retrospective application	－	－	－	－	3,620	－	19,331	(22,951)	－	－
Balance at January1,2018 (Adjusted)	3,800,000	506,026	1,486,283	498,725	4,531,236	(2,428)	19,331	－	(1,332)	10,837,841
Legal reserve appropriated Cash dividend Reversal of special reserve Net income in 2018 Other comprehensive income for 2018, net of income tax Total comprehensive income (loss) in 2018 Purchase of treasury share Retirement of treasury share Disposal of financial assets at fair value through other comprehensive income-equityinstruments	－－－	－－－	18,924 －－	－－ (179,141)	(18,924) (240,500) 179,141	－－－	－－－	－－－	－－－	－ (240,500) －
	－－	－－	－－	－－	215,802 (2,515)	－ 3,820	－ (34,939)	－－	－－	215,802 (33,634)
	－	－	－	－	213,287	3,820	(34,939)	－	－	182,168
	－ (100,000) －	－ (13,190) －	－－－	－－－	－ (46,346) 30,395	－－－	－－ (30,395)	－－－	(419,577) 159,536 －	(419,577) －－
Balance of Dec. 31,2018	3,700,000	492,836	1,505,207	319,584	4,648,289	1,392	(46,003)	－	(261,373)	10,359,932
Legal reserve appropriated Cash dividend Special reserve appropriated Reversal of special reserve Net income in 2019 Other comprehensive income for 2019, net of income tax Total comprehensive income (loss) in 2019 Purchase of treasury share Retirement of treasury share Disposal of financial assets at fair value through other comprehensive income-equityinstruments	－－－－	－－－－	21,581 －－－	－－ 44,610 (5,557)	(21,581) (238,000) (44,610) 5,557	－－－－	－－－－	－－－－	－－－－	－ (238,000) －－
	－－	－－	－－	－－	538,957 2,034	－ (8,840)	－ 190,873	－－	－－	538,957 184,067
	－	－	－	－	540,991	(8,840)	190,873	－	－	723,024
	－ (200,000) －	－ (26,373) －	－－－	－－－	－ (73,317) (29,920)	－－－	－－ 29,920	－－－	(38,317) 299,690 －	(38,317) －－
Balance of Dec. 31,2019	$ 3,500,000	$ 466,463	$ 1,526,788	$ 358,637	$ 4,787,409	$ (7,448)	$ 174,790	$ －	$ －	$ 10,806,639

(The attached notes constitute a part of the parent company only financial statements.)

Formosan Rubber Group Inc.

Parent Company Only Statement of Cash Flows

From Jan. 1 to Dec. 31, 2019 and 2018

	Unit: In Thousands of NTD From Jan. 1 to Dec. 31, 2019 From Jan. 1 to Dec. 31, 2018 Amount Amount $ 550,010 $ 260,769 123,648 116,006 (1,556) (3,317) (1,240) (44) 19,630 21,870 (20,596) (31,756) (115,727) (113,936) (32,513) (13,924) (388) (30) (696) － 29,998 － 1,494 － (4,329) 20,441 60,025 8,300 9,474 (1,253) 182,075 (26,661) 1,001,097 (12,779) 29,154 (172,833) 96 (94) (35,790) 2,202 (24,982) (4,410) (19,279) 41,148 (61,257) 219,647 (464) (424) (8) (426) (498) (1,228) 1,687,378 307,268	Unit: In Thousands of NTD From Jan. 1 to Dec. 31, 2019 From Jan. 1 to Dec. 31, 2018 Amount Amount $ 550,010 $ 260,769 123,648 116,006 (1,556) (3,317) (1,240) (44) 19,630 21,870 (20,596) (31,756) (115,727) (113,936) (32,513) (13,924) (388) (30) (696) － 29,998 － 1,494 － (4,329) 20,441 60,025 8,300 9,474 (1,253) 182,075 (26,661) 1,001,097 (12,779) 29,154 (172,833) 96 (94) (35,790) 2,202 (24,982) (4,410) (19,279) 41,148 (61,257) 219,647 (464) (424) (8) (426) (498) (1,228) 1,687,378 307,268
Item	From Jan. 1 to Dec. 31, 2019	From Jan. 1 to Dec. 31, 2018
	Amount	Amount
Cash flows from operating activities: Income before income tax Adjustments for: Depreciation expense Expected credit impairment loss (gain) Net loss (gain) on financial assets and (liabilities) at fair value through loss (profit) Interest expense Interest income Dividend income Share of loss (profit) of subsidiaries and associates Loss (gain) on disposal of property, plant and equipment Loss (gain) on disposal of investment properties Loss (gain) on disposal of investments Impairment loss on non-financial assets Changes in operating assets and liabilities Notes receivable Accounts receivable Other receivables Inventories Real estate for sale and real estate under construction Prepayments Other current assets Notes payable Accounts payable Other payables Contract liabilities Receipts in advance Other current liabilities Net defined benefit liability Cash generated from operations	$ 550,010 123,648 (1,556) (1,240) 19,630 (20,596) (115,727) (32,513) (388) (696) 29,998 1,494 (4,329) 60,025 9,474 182,075 1,001,097 29,154 96 (35,790) (24,982) (19,279) (61,257) (464) (8) (498)	$ 260,769 116,006 (3,317) (44) 21,870 (31,756) (113,936) (13,924) (30) －－－ 20,441 8,300 (1,253) (26,661) (12,779) (172,833) (94) 2,202 (4,410) 41,148 219,647 (424) (426) (1,228)
	1,687,378	307,268

Formosan Rubber Group Inc.

Parent Company Only Statement of Cash Flows (Continued)

From Jan. 1 to Dec. 31, 2019 and 2018

	Unit: In Thousands of NTD From Jan. 1 to Dec. 31, 2019 From Jan. 1 to Dec. 31, 2018 Amount Amount 19,590 33,674 115,727 113,936 (20,090) (22,273) (47,133) (26,019) 1,755,472 406,586 (109,305) (423,278) 34,518 151,304 8,000 7,264 － (6,622) 17,281 6,830 (238,918) (84,514) (11,753) (112,695) 687 30 3,062 (101) 828 14,427 1,008 － 469,145 1,234,043 422 422 (774) 61,199 174,201 848,309 (1,160,000) (632,000) (320,095) 100,156 (1,960) 2,334 (6,182) － (238,000) (240,500) (38,317) (419,577) (1,764,554) (1,189,587) 165,119 65,308 735,031 669,723 $ 900,150 $ 735,031	Unit: In Thousands of NTD From Jan. 1 to Dec. 31, 2019 From Jan. 1 to Dec. 31, 2018 Amount Amount 19,590 33,674 115,727 113,936 (20,090) (22,273) (47,133) (26,019) 1,755,472 406,586 (109,305) (423,278) 34,518 151,304 8,000 7,264 － (6,622) 17,281 6,830 (238,918) (84,514) (11,753) (112,695) 687 30 3,062 (101) 828 14,427 1,008 － 469,145 1,234,043 422 422 (774) 61,199 174,201 848,309 (1,160,000) (632,000) (320,095) 100,156 (1,960) 2,334 (6,182) － (238,000) (240,500) (38,317) (419,577) (1,764,554) (1,189,587) 165,119 65,308 735,031 669,723 $ 900,150 $ 735,031
Item	From Jan. 1 to Dec. 31, 2019	From Jan. 1 to Dec. 31, 2018
	Amount	Amount
Interest received Dividends received Interest paid Income tax paid Net cash (used in) generated by operating activities Cash flows from investing activities: Cash paid for acquisition of financial assets at fair value through other comprehensive income Proceeds from financial assets at fair value through other comprehensive income Return of capital from financial assets at fair value through other comprehensive income Cash paid for financial assets at fair value through profit or loss Proceeds from financial assets at fair value through profit or loss Acquisition of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment (Increase) refundable deposits (Increase) decrease in notes and accounts receivable Proceeds from disposal of investment properties (Increase) decrease in other financial assets (Increase) decrease in other non-current assets (Increase) decrease in prepayments for equipment Net cash (used in) generated by investing activities Cash flows from financing activities: Increase (decrease) in short-term borrowings Increase (decrease) in short-term notes and bills payable Increase (decrease) in guarantee deposits received Payments of lease liabilities Cash dividends paid Payments to acquire treasury shares Net cash (used in) generated by financing activities Net Increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end ofyear	19,590 115,727 (20,090) (47,133)	33,674 113,936 (22,273) (26,019)
	1,755,472	406,586
	(109,305) 34,518 8,000 － 17,281 (238,918) (11,753) 687 3,062 828 1,008 469,145 422 (774)	(423,278) 151,304 7,264 (6,622) 6,830 (84,514) (112,695) 30 (101) 14,427 － 1,234,043 422 61,199
	174,201	848,309
	(1,160,000) (320,095) (1,960) (6,182) (238,000) (38,317)	(632,000) 100,156 2,334 － (240,500) (419,577)
	(1,764,554)	(1,189,587)
	165,119 735,031	65,308 669,723
	$ 900,150	$ 735,031

(The attached notes constitute a part of the parent company only financial statements.)

Formosan Rubber Group Inc.

Notes to Parent Company Only Financial Statements

From Jan. 1 to Dec. 31, 2019 and 2018

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

1. Company profile

Formosan Rubber Group Inc. (hereafter referred to as the“Company”) was founded in 1963 under the Company Act of the Republic of China. The company produces and markets rubber sheets, plastic sheets, plastic foam sheets and PVC resin sheets, as well as the relevant materials. In order to diversity its operations, the Company started in September 1995 the property development business and the leasing, sale and management operations for its own properties and land. the Company became a listed company on the Taiwan Stock Exchange in March 1992. The parent company only financial statements has the New Taiwan dollars as the Company’s functional currency.

2. Date and procedure approving financial statements

The parent company only financial statements were approved and published by the board of directors on March 20, 2020.

3. Applicability of newly published and amended standards 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 as endorsed by FSC effective from 2019 are as follows:

from 2019 are as follows:
New Standards, Interpretations and Amendments	Effective date by International Accounting Standards Board
Prepayment features with negative compensation (amendments to IFRS 9) IFRS 16, Leases Plan amendment, curtailment or settlement (amendments to IAS 19) Long-term interests in associates and joint ventures (amendments to IAS 28) IFRIC 23, Uncertainty over income tax treatments Annual improvements to IFRSs 2015-2017 cycle	January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019

Except for the following, the Company believes that the initial adoption of the abovementioned standards or interpretations would not have a material impact on its accounting policies.

IFRS 16, Leases

IFRS 16 sets out the accounting standards for leases that will supersede IAS 17 “Leases”, IFRIC 4 “Determining whether an Arrangement contains a Lease”, and a number of related interpretations.

Definition of a lease

Upon initial application of IFRS 16, the Company will elect to apply the guidance of IFRS 16 in determining whether contracts are, or contain, a lease only to contracts entered into (or changed) on or after January 1, 2019. Contracts identified as containing a lease under IAS 17 and IFRIC 4 will not be reassessed and will be accounted for in accordance with the transitional provisions under IFRS 16.

The Company as lessor

The Company will not make any adjustments for leases in which it is a lessor and will account for those leases with the application of IFRS 16 starting from January 1, 2019.

The Company as lessee

Upon initial application of IFRS 16, the Company will recognize right-of-use assets, or investment properties if the right-of-use assets meet the definition of investment properties, and lease liabilities for all leases on the parent company only balance sheets except for those whose payments under the low-value asset and short-term leases will be recognized as expenses on a straight-line basis. On the parent company only statements of comprehensive income, the Company will present the depreciation expense charged on right-of-use assets separately from the interest expense accrued on lease liabilities; interest is computed using the effective interest method. On the parent company only statements of cash flows, cash payments for the principal portion of lease liabilities will be classified within financing activities; cash payments for the interest portion will be classified within operating activities. Currently, payments under operating lease contracts are recognized as expenses on a straight-line basis.

The Company anticipates applying IFRS 16 retrospectively with the cumulative effect of the initial application of this standard recognized on January 1, 2019. Comparative information will not be restated.

The Company accounts for those leases which the lease term ends on or before December 31, 2019 as short-term leases.

The weighted average lessee’s incremental borrowing rate applied to lease liabilities recognized on January 1, 2019 is 1.09%. The difference between the lease liabilities recognized and future minimum lease payments of non-cancellable operating lease commitments disclosed on December 31, 2018

is explained as follows:

is explained as follows:
The future minimum lease payments of non-cancellable operating lease commitments on December 31, 2018 Less: Recognition exemption for short-term leases Undiscounted amounts on January 1, 2019 Discounted amounts using the incremental borrowing rate on January 1, 2019 Lease liabilities recognized on January 1, 2019	$ 56,260 (254)
	$ 56,006
	$ 53,151
	$ 53,151

The impact on assets, liabilities and equity as of January 1, 2019 from the initial application of IFRS 16 is set out as follows:

Right-of-use assets Lease liabilities	Carrying Amount as of December 31, 2019	Adjustments Arising from Initial Application	Adjusted Carrying Amount as of January1,2019
	$ －	$ 53,151	$ 53,151
	$ －	$ 53,151	$ 53,151

(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but

not yet adopted by the Company

New standards, interpretations and amendments endorsed by FSC effective from 2020 are as follows:

from 2020 are as follows:
New Standards, Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IAS 1 and IAS 8 “Definition of Material” Amendments to IFRS 3 “Definition of a Business” Amendments to IFRS 9, IAS 39 and IFRS 7 “Interest Rate Benchmark Reform”	January 1, 2020 January 1, 2020 January 1, 2020

The Company believes that the initial adoption of abovementioned standards or

interpretations would not have a material impact on its accounting policies.

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

As of the date the following IFRSs that have been issued by the IASB, but not yet endorsed by the FSC:

yet endorsed by the FSC:
New Standards, Interpretations and Amendments	Effective Date Issued by IASB
Sale or contribution of assets between an investor and its associate or joint venture (amendments to IFRS 10 and IAS 28) IFRS 17, Insurance Contracts	To be determined by IASB January 1, 2021

The Company believes that the initial adoption of abovementioned standards or interpretations would not have a material impact on its accounting policies.

4. Summary of significant accounting policies

(1) Compliance statement

This is the Company’s first set of parent company only financial statements prepared according to the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS) and IFRIC as well as interpretation announcements approved by the FSC.

(2) Preparation bases

Other than the financial assets measured at the fair value and the pension liability recognized with the net value (assets less the present value of the liabilities due to defined benefits), the parent company only financial statements are based on historical costs, usually the fair value paid for the acquisition of assets.

The subsidiaries, associates are incorporated in the parent company only financial statements under the equity method. To make net profit for the year, other comprehensive income and equity in the parent company only financial statements equal to those attributed to owners of the Company on parent company only financial statements, the effect of the differences between basis of parent company only and basis of consolidation are adjusted in the investments accounted for using equity method, the related share of the profit or loss, the related share of other comprehensive income of subsidiaries and associates and related equity.

(3) Foreign Currency

The individual financial statements for the parent company only entities are prepared and presented in the functional currency for these entities (i.e. the currency used in the economy they operate in). The functional currency and the presentation currency of the Company’s Parent company only financial statements is NT Dollars. All the financial performances and statuses are converted into the NT dollars for the preparation of the parent company only financial statements.

Any transactions not in the functional currency shall be converted and recognized according to the exchange rate on the transaction dates in the preparation of the individual financial statements for the parent company only entities. The monetary items in foreign currencies shall be recalculated according to the spot exchange rate on the end-of-the-period date. Any difference resultant from exchange rates shall be recognized as profits or losses during the period. The non-monetary items in foreign currencies measured with the fair value shall be recalculated according to the exchange rate on the date of fair value determination. Any different resultant from exchange rates shall be recognized as profits or losses during the period. However, any difference as a result of changes in the fair value shall be recognized as other comprehensive incomes or losses. The non-monetary items in foreign currencies measured by historical costs shall not be recalculated.

For the purpose of presenting parent company only financial statements, the functional currencies of the group entities are translated into the presentation currency, the New Taiwan dollar, as follows: Assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; and income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income.

On the disposal of a foreign operation, all of the exchange differences accumulated in equity in respect of that operation attributable to the owners of the Corporation are reclassified to profit or loss.

In relation to a partial disposal of a subsidiary that does not result in the Corporation losing control over the subsidiary, the proportionate share of accumulated exchange differences is re-attributed to non-controlling interests of the subsidiary and is not recognized in profit or loss. For all other partial disposals, the proportionate share of the accumulated exchange differences recognized in other comprehensive income is reclassified to profit or loss.

(4) Standards to classify current and non-current assets and liabilities

The basis for current and non-current assets and liabilities for the real estate development business is based on the operating cycle. All the other items following the principles below:

Current assets are the assets held for trading purposes or expected to be realized or exhausted within one year. Any assets not classified as current are non-current assets. Current liabilities are the liabilities held for trading purposes or expected to be repaid within one year. Any liabilities not classified as current are non-current liabilities.

(5) Cash equivalents

Cash equivalents can be converted into a fixed amount of cash at any time. They are short-term, highly liquid investments with minimum changes in value. Bank overdrafts, a credit facility that can be immediately repaid, are part of the Company’s cash management. They are reported under cash and cash equivalents in the statement of cash flows, and as an item in short term loans in current liabilities on the balance sheet.

(6) Inventory and real estate for sale and real estate under construction

Measured with the lower of costs or net realizable value. Inventory cost is calculated with the weighted averaging method. The cost allocation over sold and unsold real estate for sale and real estate under construction is based on either selling prices or floor spaces. However, this cannot be changed for the same project during different years. Net realizable value refers to the balance of estimated selling prices less the estimated costs to complete the construction and the estimated costs to complete the sale.

(7) Investments accounted for under equity method

Investments accounted for using the equity method is investments in subsidiaries and associates.

A. A subsidiary is an entity that is controlled by the Company.

Under the equity method, an investment in a subsidiary is initially recognized at cost and adjusted thereafter to recognize the Company’s share of profit or loss and other comprehensive income of the subsidiary as well as the distribution received. The Company also recognized its share in the changes in the equity of subsidiaries.

Changes in the Company’s ownership interests in subsidiaries that do not result in the Company losing control over the subsidiaries are accounted for as equity transactions. Any difference between the carrying amount of the subsidiary and the fair value of the consideration paid or received is recognized directly in equity.

The acquisition cost exceeding the amount of the share of the fair value of the subsidiary’s recognizable assets and liabilities received by the Company on its acquisition day is listed as goodwill. Such goodwill includes the investment’s book value which cannot be amortized. The amount exceeding the share of the fair value of the subsidiary’s recognizable assets and liabilities received by the Company on its acquisition day is listed as the current income.

When losing the control of its subsidiary, the Company measures its residual investment in the aforesaid subsidiary according to the fair value at the day that the Company loses its control of the subsidiary. The difference between the residual investment’s fair value as well as any disposal amount and the investment book value at the day that the Company loses its control is listed as the current profit or loss. In addition, the accounting treatment of all the amounts related to the subsidiary in question and recognized in the comprehensive income is same as the basis required to be complied with in the Company’s direct handling of related assets or liabilities.

When the Company transacts with its subsidiaries, profits and losses resulting from the transactions with the subsidiaries are recognized in the Company’s parent company only financial statements only to the extent of interests in the subsidiaries that are not owned by the Company.

B. Investments in associates are reported.

Associates are the companies over which the Company has significant influence. Associates are not entitles of subsidiaries.

The investment in associates shall be recognized as costs under the equity method. After the asset acquisition, the book value shall change in line with the Company’s share of profits and losses, other comprehensive income and profit distributions. Meanwhile, the recognized equity value of the associates also changes in line with any increase or decrease in the Company’s shares. If the Company does not subscribe to the new shares of associates on a pro-rata basis according to existing holdings, and any increase or decrease is incurred to the percentage of the Company’s holdings and hence net equity value of the investment, the adjustment shall be reflected with the change in capital surplus and according to the equity method. If the Company has not subscribed or acquired to new shares on a pro-rata basis and seen a reduction in its stake in the associates, the amounts recognized in other comprehensive income and the reclassification as a result of the values for the associates concerned should have the same basis for accounting treatment as if the assets or the liabilities of the associates were directly disposed. Any debit should be made from the capital surplus. However, if the capital surplus is insufficient for debits incurred by investments under the equity method, the debit may be drawn from retained earnings.

The residual investment of the previous associates should be measured with the fair value on the date of loss of significant influence. The delta between the sum of the fair value of the residual investment and the disposal amounts and the book value of the investment on the date of loss of significant control shall be recognized in the income statement during the period. Meanwhile, the values recognized in relation to the associates concerned in other comprehensive income shall have the same accounting basis as if the assets or the liabilities of the associates were directly disposed.

Only the profits and losses resultant from upstream, downstream and lateral transactions with associates not relevant to the Company’s stake in the associates can be recognized in the parent company only financial statements.

(8) Property, plant and equipment

The property, plant and equipment are listed in accordance with cost less depreciation and accumulated impairment. Cost shall include the incremental cost able to be directly attributed to acquisition or asset implementation.

Straight-line method is applied to depreciation, by indicating the amount of an asset within the durable service life offset its cost and less its residual value. All the major components of the non-current assets shall be depreciated on a standalone basis. Depreciation is accrued in accordance with the following durable service years: building, 3-55 years; machinery equipment, 3-26 years; transportation and other equipments, 3-24 years.

Estimated durable service life, residual value and depreciation method shall be reviewed at the end of the reporting period; prospective application shall be made for any impact on estimation change.

The profit or loss incurred during disposition or obsolescence of property, plant and equipment shall be recognized in the income statement with the differential amount between the disposition price and asset book account.

(9) Investment property

Only if investment properties is attempted for earning rental or capital appreciation or both may it be classified as the investment properties. The investment properties shall be measured according to its original cost, including related transaction cost, and related interest capitalization shall be made during the construction period. Cost model shall be applied to follow-up measurement, to be measured by cost less the amounts of accumulated depreciation and accumulated impairment.

In case straight-line method is applied to depreciation and building depreciation accrued by 23-50 years.

Estimated durable service life, residual value and depreciation method shall be reviewed at the end of the reporting period; prospective application shall be made for any impact on estimation change.

(10) Lease

2019

A. The Company as lessor

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Lease payments (less any lease incentives payable) from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases. Initial direct costs incurred in obtaining operating leases are added to the carrying amounts of the underlying assets and recognized as expenses on a straight-line basis over the lease terms.

When a lease includes both land and building elements, the Company assesses the classification of each element separately as a finance or an operating lease based on the assessment as to whether substantially all the risks and rewards incidental to ownership of each element have been transferred to the Company. The lease payments are allocated between the land and the building elements in proportion to the relative fair values of the leasehold interests in the land element and building element of the lease at the inception of a contract. If the allocation of the lease payments can be made reliably, each element is accounted for separately in accordance with its lease classification. When the lease payments cannot be allocated reliably between the land and building elements, the entire lease is generally classified as a finance lease unless it is clear that both elements are operating leases; in which case, the entire lease is classified as an operating lease.

B. The Company as lessee

The Company recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the parent company only balance sheets.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments and variable lease payments which depend on an index or a rate. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses the lessee’s incremental borrowing rate.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in future lease payments resulting from a change in an index or a rate used to determine those payments, the Company remeasures the lease liabilities with a corresponding adjustment to the right-of-use assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the parent company only balance sheets.

2018

The lease transaction of the Company is operating lease other than financial leasing; financial leasing refers to a leasing method where lease clauses almost transfer all risks and compensation of the subsidiary ownership to the lessee.

The income of operating lease shall be recognized as income according to straight-line basis during the lease period.

The payment of operating lease shall be recognized as expense according to straight-line basis during the lease period, unless there are other systematic methods which can better represent the time mode of economic efficiency consumption of a lease asset.

(11) Impairment of non-financial assets

The Company shall review the book amounts of tangible assets and intangible financial assets at the end of the reporting period to decide whether there is any impairment with such assets. In case it shows any impairment situation, the estimated recoverable amount of assets shall decide the recognized loss amount. In case there is no way of estimating the recoverable amount of an individual asset, the Company shall estimate the recoverable amount of the cash-generating unit of the said asset. In case it can be amortized according to a reasonable and conforming basis, shared assets shall also be amortized to an individual cash product sector. Otherwise it shall be amortized to the minimal cash-generating unit group according to a reasonable and conforming basis.

The recoverable amount shall be fair value less sales cost and its use value whichever is higher.

In case the recoverable amount of an asset or cash-generating unit is anticipated to be lower than the book amount, the book amount of the said asset or cash-generating unit shall be adjusted and decreased to its recoverable amount; any impairment loss shall be immediately recognized to the current profit and loss.

When any impairment loss reverses in a subsequent period, the book amount of asset or cash-generating unit shall be adjusted and increased to the estimated recoverable amount after revision, provided the book amount after increase shall be limited to the reasonable book amount under the situation when the said asset or cash-generating unit did not recognize an impairment loss in the past years (except for goodwill). The reversed impairment loss shall be immediately recognized to the current profit and loss.

(12) Employee benefits cost

The short-term employee benefits obligation is measured with the basis without discount, and shall be recognized as expenses when providing the related service. Concerning the anticipated payable amount concerning short-term cash bonus or a bonus sharing plan, if it is a current legal or prescribed obligation to be borne by a company due to the past service provided by employees, and the said obligation can be estimated in a reliable manner, such amount shall be listed as liability.

When an expense belongs to defined contribution plans, during the service period provided by employees, it is required to recognize the pension amount contributable as the current expense.

The cost of defined benefits (including service costs, net interests and re-measurements) shall be calculated according to the projected unit credit method. Service costs and net interests of the defined benefits liabilities shall be recognized as employee benefits expenses when incurred, or when the defined benefit plans is modified, shortened or repaid. The re-measurement shall be recognized as other comprehensive income and the retained earnings. There is not reclassification into profits and losses during subsequent periods.

Net defined benefit liabilities refer to the shortfall appropriation of the defined benefit retirement plan, whereas net defined benefit assets shall not exceed the plan’s refunded amount or may reduce the present value of the future appropriation amount.

(13) Financial Instrument

Financial assets and financial liabilities shall be recognized when the Company becomes a party of the said financial instrument clause.

Upon the original recognition of financial assets and financial liabilities, they shall be measured according to fair values. Upon the original recognition, concerning the acquired or distributed transaction cost directly attributable to financial assets and financial liabilities (except for the financial assets and financial liabilities classified as measurement according to fair value of profit and loss), it shall be increased or decreased from the fair values of the said financial assets or financial liabilities. The transaction costs of financial assets and financial liabilities directly attributable to the ones measured according to fair values through profit and loss shall be immediately recognized as profit and loss.

A. Financial assets

The convention trading of financial assets is recognized and removed by trading day accounting.

a. Type of measurement

Financial assets are classified into the following categories: financial assets at FVTPL, financial assets at amortized cost, and FVTOCI.

A) Financial asset at FVTPL

Financial assets measured at fair value through profit or loss are financial assets mandatorily measured at fair value through profit or loss and financial assets at fair value through profit or loss, designated as upon initial recognition. Financial assets mandatorily measured at fair value through profit or loss include investments in equity instruments that are not designated by the Company to be measured at fair value through other comprehensive income and investments in debt instruments that fail to meet the criteria as to be measured at amortized cost or at fair value through other comprehensive income.

Any gain or loss arising from remeasurement is recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any interest earned on the financial asset.

B) Measured at amortized cost

When a company after merger simultaneously meets the following two conditions in its investment in financial assets, the financial assets are classified as the ones carried at cost after amortization:

a) The financial assets are held under a specific operation mode, in which the purpose of the mode is to hold the financial assets in order to collect contract cash flows.
b) The cash flow generated on a specific date due to contract clauses is completely for the payment of the principal and the interest accrued from the outstanding principal amount.

Subsequent to initial recognition, financial assets measured at amortized cost are measured at amortized cost, which equals to carrying amount determined by the effective interest method less any impairment loss. Foreign exchange gains and losses are recognized in profit or loss.

Except for the two conditions below, the interest income is calculated by multiplying the effective interest rate by the total book value of the financial assets:

a) The interest income of the purchased or originated credit-impaired financial assets is calculated by multiplying the credit-adjusted effective interest rate by the cost of amortized financial assets.
b) The interest income of the financial assets which are not purchased or originated credit-impairment but subsequently become credit-impaired financial assets is calculated by multiplying the effective interest rate by the cost of amortized financial assets.

C) Investment in debt instruments measured at FVTOCI

Debt instruments that meet the following two conditions are classified as financial assets at fair value through other comprehensive income:

a) The debt instruments are held within a business model whose objective is to collect the contractual cash flows and to sell the financial assets; and
b) The contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Investments in debt instruments at fair value through other comprehensive income are measured at fair value. Changes in the carrying amount of investments in debt instruments at fair value through other comprehensive income, such as interest revenue calculated using the effective interest method, gain (loss) on foreign exchange and impairment loss or gain on reversal, are recognized in profit or loss. Other changes in the carrying amount of such instruments are recognized in other comprehensive income and will be reclassified to profit or loss when such instruments are disposed of.

D) Investments in equity instruments at FVTOCI

On initial recognition, the Company may make an irrevocable election to

designate investments in equity instruments as at FVTOCI. Designation at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent considerati on recognized by an acquirer in a business combination.

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments, instead, they will be transferred to retained earnings.

Dividends on these investments in equity instruments at FVTOCI are recognized in profit or loss when the Company’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

B. Impairment of financial assets

At the end of each reporting period, a loss allowance for expected credit loss is recognized for financial assets at amortized cost (including accounts receivable) investments in debt instruments at fair value through other

comprehensive income, lease payments receivable due, and contract assets based on their expected credit losses on each balance sheet date.

The loss allowance for accounts receivable and lease payments receivable due is measured at an amount equal to lifetime expected credit losses. For financial assets at amortized cost, when the credit risk on the financial instrument has not increased significantly since initial recognition, a loss allowance is recognized at an amount equal to expected credit loss resulting from possible default events of a financial instrument within 12 months after the reporting date. If, on the other hand, there has been a significant increase in credit risk since initial recognition, a loss allowance is recognized at an amount equal to expected credit loss resulting from all possible default events over the expected life of a financial instrument.

The expected credit loss is calculated according to the average weighted credit loss in which the risk rated ratio of default occurrence is used in calculation. The 12-month expected credit loss represents the credit loss expected to occur to the financial instruments within 12 months after their reporting day due to possible default. The expected credit loss in the duration period refers to the credit loss expected to occur to the financial instruments in the expected duration period due to possible default.

The Company recognizes an impairment loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account, except for investments in debt instruments that are measured at fair value through other comprehensive income, for which the loss allowance is recognized in other comprehensive income and does not reduce the carrying amount of the financial assets.

(14) Income recognition

After identifying the performance obligations of contracts with the customers, the Company allocates the transaction price to the performance obligations and recognizes revenue when performance obligations are met.

(15) Borrowing costs

The cost of borrowing for the funds directly used to acquire, construct or produce the assets (which will reach the status ready for use or available for sale after a long period of time) can be treated as part of the asset costs, until the completion of almost all the necessary activities to get the assets ready for use or available for sale.

Other than the above, all the borrowing costs shall be recognized in the income statement during the current period.

(16) Income tax

Income tax expenses include income taxes during the period and deferred income taxes, and should be recognized as income taxes in the profit and loss income, except for the income taxes during the period and deferred income taxes recognized as other comprehensive incomes or directly as an equity item.

A. Current tax

The current income tax is based on the taxed income of the said year. Since partial income and expense is taxable item or deductible of other years, or not attributing to taxable or deductible item in accordance with related tax laws, it causes the taxable income to differ from the reported net profit in the parent company only income statement. The related liabilities of the current income tax are calculated by the legislated or substantially legislated tax rate at the end of the reporting period. It is estimated by the income tax of the previous year, serving as the adjustment of the current income tax.

According to the provisions of Income Tax Law, The unallocated earnings of the Company adding 10% profit-seeking enterprise income tax shall be recognized as the current expense in the allocated earning year resolved in the shareholders’ meeting

B. Deferred tax

Deferred income tax is recognized by the temporary differential calculation generated from the taxation basis of book amounts of the recorded assets and liabilities and income through taxation calculation. Deferred income tax liabilities in general are recognized by the temporary differences of all future taxes payable. Deferred income tax assets are recognized by all likely future taxes less the deductible temporary difference in use.

Deferred income tax assets and deferred income tax liabilities may only be mutually offset when concurrently conforming to the following conditions: (1) a company has legal execution right to mutually offset the current income tax assets and income tax liabilities; and (2) deferred income tax assets and deferred income tax liabilities are levied by the same taxation authority towards the same tax payment major entity, or levied towards different tax payment corporate entities, yet each major entity attempts to, at each future period of the deferred income tax liabilities or assets pay-off or recovery of the major amount, pay off the current income tax liabilities and assets on net-amount basis, or concurrently realize assets and pay off liabilities.

The temporary differences in tax payables related to invested subsidiary company and associates are all recognized as deferred income tax liabilities, provided if the Company can control the time point of temporary difference reverse, and the said temporary differences may very likely not be reversed in the foreseeable future are excluded. The deferred income tax assets generated from the related deductible temporary differences to this kind of investment and equity can only be recognized in the gains very likely with sufficient taxable income used to realize the temporary differences, and be within the scope of reverse within the anticipated future.

The book amounts of deferred income tax assets shall be reviewed at the end of the reporting period, and adjust and decrease the book amounts for all or partial assets without sufficiently taxable income to serve it to recover. Concerning the ones originally not recognized deferred income tax assets, they shall also be reviewed at the end of the reporting period, and adjust and increase the book amounts for all or partial assets very likely to generate taxable income to serve it to recover.

The deferred income tax assets and liabilities are measured by expected liabilities pay-off or assets in realizing the current tax rate, while the said tax rate shall be based on the legislated or already substantially legislated tax rate at the end of the reporting period. The measurement of deferred income tax liabilities and assets shall reflect the tax consequences of a company generated in expected recovery or pay-off of the book amounts of its assets and liabilities at the end of the reporting period.

(17) Treasury stocks

The recovered issued stock shall be recognized as treasury stocks I accordance with the paid cost upon buy-back. In case the disposition price in disposing treasury stocks is higher than the book value, its difference shall be listed as capital surplus – treasury stocks trade; in case the disposition price in disposing treasury stocks is lower than the book value, its difference shall be offset the capital surplus generated from the trade of the treasury stocks of the same category of treasury stocks; in case of any deficit, it shall be debited to keep the surplus. Weighted average shall be applied to the book value of treasury stocks and be separately calculated in accordance with the recovery reasons.

Upon cancellation of treasury stocks, it shall be debited to keep the capital surplus – stock issue premium and share capital; in case its book value is higher than the total sum of par value and stock issue premium, its difference shall offset the capital surplus generated from the trade of the treasury stocks of the same category of treasury stocks; in case of any deficit, it shall be debited to offset retained earnings; in case the book value of treasury stocks is lower than the total amount of par value and stock issue premium, it shall be credited as the capital surplus generated from the trade of the treasury stocks of the same category of treasury stocks.

5. Citical Accounting Judgements, And Key Sources Of Estimation And Uncertainty

The Company upon applying the accounting policy stated in Note 4 provides related judgments, estimations and assumptions for the information acquired from other resources which are based on historical experience and other factors deemed crucial. The actual result may differ from what is estimated.

The Company shall be continuously reviewing estimations and basic assumptions. In case the revision of estimations would influence the current period, then the current recognition shall be revised in accounting estimations. In case the revision of accounting estimations would concurrently influence the current period and future period, then the estimations revision shall be recognized in both the current period and future period.

The following shows the information related to major assumptions made in the future, and other major sources of uncertainty at the end of the financial reporting period; the said assumptions and estimations have risks of causing book amounts of assets and liabilities to incur major adjustments in the following fiscal year.

(1) Evaluation of inventory and real estate for sale and real estate under construction

Since inventory and real estate for sale and real estate under construction shall be priced by cost and net cash realizable value whichever is lower, therefore the Company shall use judgments and estimations to determine the net cash realizable value at the end of the financial reporting period.

Since industry rapidly changes, the inventory and real estate for sale and real estate under construction of the Company at the end of the financial reporting period due to the amounts of normal wear and tear, obsolescence, or without market selling price, offsets its cost to decrease to its net cash realizable value. The evaluation of this inventory andreal estate for sale and real estate under constructionis mainly based on the product demand in the future specific period as estimation basis; therefore, it may generate major changes.

(2) Impairment evaluation of tangible assets and intangible assets (except for goodwill)

During the asset impairment evaluation process, the Company shall rely on subjective judgments and, with basis on asset use mode and rubber, real estate industry characteristics, determine parent company only cash flow asset durable years and future likely generated revenues and expenses of specific asset groups; any change in estimations from changes in economic status or corporate policies may likely cause major impairment in the future.

6. Cash and cash equivalents

Dec. 31, 2019 Dec. 31, 2018 Cash and petty cash $ 579 $ 572 Cash in bank 375,265 196,248 Cash equivalent Commercial paper 224,006 170,171 Time deposits with maturity 300,300 368,040 Total $ 900,150 $ 735,031 Financial assets at fair value through profit or loss-current Dec. 31, 2018 Current financial assets at fair value through profit or loss, designated as upon initial recognition Fund $ 16,041 Financial assets at fair value through other comprehensive income Dec. 31, 2018 Dec. 31, 2018 Equity instruments Stock of domestic listed (OTC) companies $ 2,004,030 $ 1,955,475 Stock of emerging companies 7,860 7,860 Stock not classified to listed (OTC) and emerging companies 174,107 182,107 Debt instruments Financial bond － 33,685 Plus (Less): adjustment of financial assets for transaction 47,090 (58,076) Total $ 2,233,087 $ 2,121,051 Current $ 2,123,296 $ 1,977,739 Non-current $ 109,791 $ 143,312	Dec. 31, 2019 Dec. 31, 2018 Cash and petty cash $ 579 $ 572 Cash in bank 375,265 196,248 Cash equivalent Commercial paper 224,006 170,171 Time deposits with maturity 300,300 368,040 Total $ 900,150 $ 735,031 Financial assets at fair value through profit or loss-current Dec. 31, 2018 Current financial assets at fair value through profit or loss, designated as upon initial recognition Fund $ 16,041 Financial assets at fair value through other comprehensive income Dec. 31, 2018 Dec. 31, 2018 Equity instruments Stock of domestic listed (OTC) companies $ 2,004,030 $ 1,955,475 Stock of emerging companies 7,860 7,860 Stock not classified to listed (OTC) and emerging companies 174,107 182,107 Debt instruments Financial bond － 33,685 Plus (Less): adjustment of financial assets for transaction 47,090 (58,076) Total $ 2,233,087 $ 2,121,051 Current $ 2,123,296 $ 1,977,739 Non-current $ 109,791 $ 143,312	Dec. 31, 2018
		$ 572 196,248 170,171 368,040
		$ 735,031
Equity instruments Stock of domestic listed (OTC) companies Stock of emerging companies Stock not classified to listed (OTC) and emerging companies Debt instruments Financial bond Plus (Less): adjustment of financial assets for transaction Total Current Non-current	Dec. 31, 2018 $ 2,004,030 7,860 174,107 － 47,090 $ 2,233,087 $ 2,123,296 $ 109,791
		$ 1,955,475 7,860 182,107 33,685 (58,076)
		$ 2,121,051
		$ 1,977,739
		$ 143,312

(1) The Company has signed a loan business trust contract with Chinatrust Commercial Bank, Co., Ltd. on July 1, 2010, by delivering the trust of partial listed (OTC) companies stocks to Chinatrust Commercial Bank, Co., Ltd. for management, use, while the beneficiary of the trust revenue was the Company, with the contract period ending on July 13, 2019.
(2) The Company signed a loan business trust contract with MasterLink Securities Corporation on June 5, 2015, delivering the trust of partial listed (OTC) companies stocks to MasterLink Securities Corporation for management, use, while the beneficiary of the trust revenue was the Company, with the contract period ending till an initiative termination of the trustor. Up to December 31, 2019, the share number and book amount of stock delivered for trust are respectively 9,200 thousand shares and NT$464,710 thousand.

9. Notes and accounts receivable ,net

Notes and accounts receivable ,net
Notes receivable Allowance for doubtful accounts Net amount Accounts receivable Allowance for doubtful accounts Net amount	Dec. 31, 2019 $ 35,437 (355) $ 35,082 Dec. 31, 2019 $ 97,429 (4,568) $ 92,861	Dec. 31, 2018
		$ 31,108 (213)
		$ 30,895
		Dec. 31, 2018
		$ 157,454 (6,266)
		$ 151,188

(1) The crediting period of the Company to a customer in principle shall be 30 days after the invoice date, while partial customers are credit time 30 days to 90 days. In addition to the actual credit impairment of individual customers, the Company makes reference to historical experience, considers the financial situation of individual customers and the industry, competitive advantage and prospects, and differentiates customers into different risk groups and incorporates forward-looking information. The expected loss rate of the Company recognizes the allowance loss.

(2)Aging analysis of accounts receivable of the Company is stated as follows:

	Dec. 31, 2019
Carrying amount of accounts receivable	Expected credit loss rate	Loss allowance for lifetime expected credit losses
$ 120,905 9,040 83 283 2,555	1～2％ 2～5％ 10～20％ 50％ 100％ Dec. 31, 2018	$ 2,006 204 16 142 2,555
$ 132,866		$ 4,923

Carrying amount of accounts receivable	Expected credit loss rate	Loss allowance for lifetime expected credit losses
$ 168,068 16,141 578 1,046 2,729	1～2％ 2～5％ 10～20％ 50％ 100％	$ 2,759 390 78 523 2,729
$ 188,562		$ 6,479

(3) Movements of the loss allowance of notes and accounts receivable were as

follow:

follow:
Balance, beginning of year Transferred form Overdue receivables Expected credit impairment loss (gain) Balance, end of year 10.Inventories Raw materials Work-in-process Finished goods Total	2019 $ 6,479 － (1,556) $ 4,923 Dec. 31, 2019 $ 114,085 21,345 121,817 $ 257,247	2018
		$ 5,905 3,891 (3,317)
		$ 6,479
		Dec. 31, 2018
		$ 175,161 32,540 231,621
		$ 439,322

(1) The cost of sales related to inventory is as follows:

The cost of sales related to inventory	is as follows:
Cost of inventories sold Unamortized fixed manufacturing costs Provision for (Reversal of) loss on inventories (Gain) loss on physical inventory Total	2019 $ 871,139 10,617 40,270 － $ 922,026	2018
		$ 917,015 10,730 6,291 1,158
		$ 935,194

11. Real estate for sale and real estate under construction/ Contract liabilities

Real estate for sale and real estate under construction	Real estate for sale and real estate under construction	Contract liabilities	Contract liabilities
Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
$ 225,599 14,923 227,243 241,545 1,635,694 1,960,691	$ 285,554 14,923 349,725 241,545 2,459,854 1,955,191	$ 47,251 －－－ 123,136 225,311	$ －－－－ 296,810 160,145
$ 4,305,695	$ 5,306,792	$ 395,698	$ 456,955

(1) The situation of already providing to serve as loan guarantees from financial

industries in detail is shown in Note 32.

(2) The detail of Information on interest capitalization refers to Note 25.

12. Other financial assets

Other financial assets
Pledged time deposits Pre-sale housing project trust funds Time deposits with maturity over three months Long-term notes and accounts receivable Total Current Non-current Interest rate range %	Dec. 31, 2019 $ 20,000 165,214 －－ $ 185,214 $ 165,214 $ 20,000 0.25～1.12	Dec. 31, 2018
		$ 20,000 112,969 521,390 828
		$ 655,187
		$ 634,359
		$ 20,828
		0.25～3.20

The pledged time deposit serves as guaranty for logistics business and it is shown in Note 32.

13. Investments accounted for using equity method

Investments in subsidiaries Investments in associates Total	Dec. 31, 2019 $ 1,095,870 77,564 $ 1,173,434	Dec. 31, 2018
		$ 733,322 60,214
		$ 793,536

(1) The investment of subsidiaries is listed as follows:

Name of Investee	Book	value	The percentage of ownership interest and voting right directly held bythe Company	The percentage of ownership interest and voting right directly held bythe Company
	Dec. 31, 2019	Dec. 31, 2018 $ 512,002 (4,042) 221,320 － 729,280 4,042 $ 733,322	Dec. 31, 2019	Dec. 31, 2018
Unlisted (OTC) companies Ban Chien Development Co., Ltd. (Taiwan) Da-Guan Recreation Company (Taiwan) FRG US Corp. (San Francisco) KINGSHALE INDUSTRIAL LIMITED (Hong Kong) Subtotal Add :Credit balance of investments accounted for using equity method transfer to other liabilities Total	$ 647,674 (4,069) 448,196 －		100.00 80.00 100.00 99.99	100.00 80.00 100.00 99.99
	1,091,801 4,069
	$ 1,095,870

The Company invests in the development project of 950 Market Street in San Francisco, USA with Continental Construction Group, the establishment of FRG US Corp. was approved by the board of directors in 2017, with an investment limit of USD 20,000 thousand. Its main businesses are real estate investment, development and rental and sales of premises.

As of December 31, 2019 and 2018, FRG has remitted Investment fund of NT$460,142 thousand (USD15,012 thousand) and NT$221,224 thousand (USD7,270 thousand) respectively.

(2) The investment of associates is listed as follows:

Name of Investee	Book	value	The percentage of ownership interest and voting right directly held by the Company	The percentage of ownership interest and voting right directly held by the Company
	Dec. 31, 2019	Dec. 31, 2018 $ 26,680 27,821 5,713 $ 60,214	Dec. 31, 2019	Dec. 31, 2018
Unlisted (OTC) companies Formosan Construction Corp. (Taiwan) Fenghe Development Co., Ltd. (Taiwan) Rueifu Development Co., Ltd. (Taiwan) Total	$ 38,843 32,009 6,712		26.20 39.90 48.26	26.20 39.90 48.26
	$ 77,564

(3) Information about associates that are not individually material was as follows

The Company’s share of: Net profit (loss) from continuing operations for the year Other comprehensive income Total comprehensive profit (loss)	2019 $ 7,276 10,074 $ 17,350	2018
		$ (4,658) (2,097)
		$ (6,755)

(4) The investment gains and losses and other comprehensive income for the subsidiaries and associates under the equity method have been recognized according to their audited financials.

14. Property, plant and equipment

Item		For the Year Ended December 31,2019	For the Year Ended December 31,2019	For the Year Ended December 31,2019
	Balance, Beginning of Year	Additions	Disposals	Reclassification	Balance, End of Year
	$ 444,026 696,889 1,045,781 22,317 226,097	$ －－ 3,001 － 8,752	$ －－ (81,886) (3,097) (2,543)	$ －－－－－	$ 444,026 696,889 966,896 19,220 232,306
	2,435,110	11,753	(87,526)	－	2,359,337
		16,827 24,662 549 20,035	－ (81,730) (2,954) (2,543)	－－－－	463,554 818,616 18,599 166,983
Building Machinery equipment Transportation equipment Other equipment Total Net Item
	1,492,906	$ 62,073	$ (87,227)	$ －	1,467,752
	$ 942,204				$ 891,585

	Balance, Beginning of Year	Additions	Disposals	Reclassification	Balance, End of Year
	$ 444,026 696,889 959,924 22,317 199,521 500	$ －－ 85,857 － 26,838 －	$ －－－－ (762) －	$ －－－－ 500 (500)	$ 444,026 696,889 1,045,781 22,317 226,097 －
	2,323,177	112,695	(762)	－	2,435,110
		17,295 23,798 928 18,976	－－－ (762)	－－－－	446,727 875,684 21,004 149,491
Building Machinery equipment Transportation equipment Other equipment Total Net
	1,432,671	$ 60,997	$ (762)	$ －	1,492,906
	$ 890,506				$ 942,204

(1) The book values of land are adjusted with basis on the government published

land value of 1975, 1979, 1980 and 1981 as well as current government-declared land value of 1992 and 2000; plant buildings and various equipments are re-evaluated in accordance with the commodity price indices in 1973 and 1980. Besides, the original revaluation increments are adjusted in relation to the tax rates of land value increment in compliance with land tax laws in January 2005.

(2) The situation of pledge & guarantee in detail is shown in Note 32.

15. Lease

(1) Right-of-use assets

For the Year Ended December 31, 2019

Balance, Beginning of Year	Additions	Disposals	Reclassification	Balance, End of Year
$ 51,552 1,599	$ －－	$ －－	$ －－	$ 51,552 1,599
53,151	－	－	－	53,151
－－	5,155 1,279	－－	－－	5,155 1,279
－	$ 6,434	$ －	$ －	$ 6,434
$ 53,151				$ 46,717

(2) Lease liabilities

For the Year Ended December 31, 2019

Less 1 year Over 1 years Total	Future minimum lease payments	Interest	Present value of minimum lease payments $ 5,281 41,688 $ 46,969
	$ 5,762 43,517	$ 481 1,829
	$ 49,279	$ 2,310

Range of discount rate for lease liabilities were as 1.09 ％ .

(3) Other lease information

Other lease information
Expenses relating to short-term leases Total cash (outflow) for all lease agreements	2019
	$ 156
	$ (6,338)

(4) Please see note 31 for the status of transactions with related parties.

16. Investment property, net

Item		For the Year Ended December 31, 2019	For the Year Ended December 31, 2019	For the Year Ended December 31, 2019
	Balance, Beginning of Year	Additions	Disposals	Impairment	Balance, End of Year
	$ 1,092,155 2,654,296	$ －－	$ (312) －	$ －－	$ 1,091,843 2,654,296
	3,746,451	－	(312)	－	3,746,139
		－ 55,141	－－	1,494 －	224,160 758,679
Land Building Total Net Fair value Item	222,666 703,538
	926,204	$ 55,141	$ －	$ 1,494	982,839
	$ 2,820,247				$ 2,763,300
	$ 4,130,385				$ 4,292,326

	Balance, Beginning of Year	Additions	Disposals	Impairment	Balance, End of Year
	$ 1,092,155 2,654,296	$ －－	$ －－	$ －－	$ 1,092,155 2,654,296
	3,746,451	－	－	－	3,746,451
		－ 55,009	－－	－－	222,666 703,538
Land Building Total Net Fair value	222,666 648,529
	871,195	$ 55,009	$ －	$ －	926,204
	$ 2,875,256				$ 2,820,247
	$ 4,064,758				$ 4,130,385

(1) Details of land:

Details of land:
Oiashui Section, Longtan Dahu Section, Miaoli Nankan Section, Taoyuan Xinban Section, Banqiao Zhuangjing Section, Xindian Total	Dec. 31, 2019		Dec. 31, 2018
	Ping	Cost	Ping	Cost
	14,381 230,253 15,395 140 53	$ 34,036 473,971 267,367 311,775 4,694	14,381 230,387 15,395 140 53	$ 34,036 474,283 267,367 311,775 4,694
		$ 1,091,843		$ 1,092,155

(3) The Company leases the real estate held for investment, with the lease period as January 1, 2008 to December 31, 2028. Provisions for the lessee to adjust the rent based on market rents when exercising the renewal rights. The lessee does not have a preferential purchase right for the real property at the end of the lease term.

A. 2019

The maturity analysis of lease payments receivable under operating leases of investment properties as of was as follows:

Year 1 Year 2 Year 3 Year 4 Year 5 Over 5 years Total	Dec. 31,2018
	$ 163,617 102,510 54,012 46,623 23,134 37,277
	$ 427,173

B. 2018

Business rental amount receivable which cannot be cancelled

Less 1 year 1 - 5 years Over 5 years Total	Dec. 31,2018
	$ 156,352 274,730 59,059
	$ 490,141

(3) As of December 31, 2019 and December 31, 2018, the book value of the investment properties let out stood at NT$2,463,083 thousand and NT$2,518,224 thousand , respectively. The rent incomes during 2019 and 2018 totaled NT$ 183,400 thousand and NT$185,929 thousand, respectively.
(4) The fair value of investment properties is based on the transaction prices of adjacent assets, the economic environment and changes in the current land values published by the Taiwanese government. The assessment is based on market comparators and discounted cash flows. It is Level 3 fair value according to IFRS.

(5) As of December 31, 2019 and 2018, the land at Dahu Section of Miaoli accumulated losses of reduction were NT$224,160 thousand and NT$222,666 thousand respectively.
(6) Details of the farm land lots registered in others’ names due to legal restrictions:

restrictions:
Oiashui Section, Longtan Dahu Section, Miaoli Nankan Section, Taoyuan Total	Dec. 31, 2019 $ 26,493 94,241 19,219 $ 139,953	Dec. 31, 2018
		$ 26,493 94,553 19,219
		$ 140,265

For the security measures of the aforementioned pieces of farm land, the Company has already periodically checked relevant land transcripts and dispatched its personnel to conduct investigation at any time in order to keep abreast of the use of the land. Part of the land has been pledged to the Company. Please see note 31 (2) C for the status of transactions with related parties.

(7) The situation of already providing to serve as loan guarantees from financial industries in detail is shown in Note 32.

17. Short-term borrowings

Short-term borrowings
Bank unsecured borrowings Bank secured borrowings - Hua Nan Bank Total Interest rate range %	Dec. 31, 2019 $ 860,000 － $ 860,000 0.91～1.15	Dec. 31, 2018
		$ 1,620,000 400,000
		$ 2,020,000
		0.91～2.07

(1) Concerning the residential building at Xitun District, Taichung City constructed jointly by the Company and Continental Engineering Corporation, a credit contract was signed with Huanan Commercial Bank on December 9, 2014, by providing the land of Huiguo Section, Taichung City to serve as guarantee, with total credit amount as NT$950,000 thousand and loan period up to February 10, 2020.

(2) The situation of pledge & guarantee in detail is shown in Note 32.

18. Short-term notes and bills payable

Short-term notes and bills payable
Commercial paper payable Less: Unamortized discount Net amount Interest rate range%	Dec. 31, 2019 $ 400,000 (452) $ 399,548 0.63～0.94	Dec. 31, 2018
		$ 720,000 (357)
		$ 719,643
		0.56～0.93

The situation of pledge & guarantee in detail is shown in Note 32.

19. Employee pensions

(1) Defined contribution plans

The employee retirement plan established by the Company in accordance with “Labor Pension Act” belongs to a defined contribution plans. Concerning the above, the Company would contribute 6% of the monthly salaries of employees to the exclusive individual accounts of Labor Insurance Bureau. In accordance with the above related regulations, the pension costs recognized as expenses in the parent company only comprehensive income statement in 2019 and January 1 to December 31, 2018 are respectively NT$6,364 thousand and NT$6,551 thousand.

(2) Defined benefit plans

A. The employee retirement plan established by the Company in accordance with “Labor Standard Act” is a defined benefit plans. In accordance with the regulations of the said plan, the employee pensions are calculated by service years and the average wage of six months prior to retirement. For the above, the Company would contribute 2% of the total employee salaries as employee pension fund, to the Supervisory Committee of Workers’ Pension Preparation Fund to be deposited into an exclusive account of Bank of Taiwan. Before the end of year, if it is estimated the balance in the exclusive account is insufficient to pay the estimated labors conforming to retirement conditions in the following year, the Company would contribute the differential amount at once before the end of March in the following year.

The retired pension cost amount in parent company only comprehensive income statement listed to expense related to defined benefit plan is as follows:

follows:
Service cost Net interest cost (income) List to (profit) loss Re-measurements Plan assets returns (excl. amount that covered in net interest income) Actuarial profit (loss)-Change of the demographic assumption Actuarial profit (loss)-Change of the financial assumption Actuarial profit (loss)- Adjustment with experience Listed to other comprehensive income	2019 $ 64 66 $ 130 156 2 (192) 2,576 $ 2,542	2018
		$ 42 42
		$ 84
		216 7 － (3,913)
		$ (3,690)

The details of the various costs and expenses recognized in profit or loss are as follows:

as follows:
Operating costs Operating expenses Total	2019 $ 130 －	2018
		$ 84 －
	$ 130	$ 84

The amount listed in the parent company only balance sheet for the

obligation occurring from the defined benefit plan is as follows

Defined benefit obligation present value Plan asset fair value Net defined benefit liability (assets)	Dec. 31, 2019 $ 6,206 (2,518) $ 3,688	Dec. 31, 2018
		$ 10,248 (3,520)
		$ 6,728

The changed of defined benefit obligation present value of this Company is as follows:

as follows:
2019 Beginning defined benefit obligation $ 10,248 Service cost current period 64 Interest expense 102 Benefits paid from plan assets (1,822) Re-measurements Actuarial (profit) loss- Change of the demographic assumption (2) Actuarial (profit) loss- Change of the financial assumption 192 Actuarial (profit) loss- Adjustment with experience (2,576) Ending defined benefit obligation $ 6,206	2018
	$ 8,144 42 81 (1,925) (7) － 3,913
	$ 10,248

The changed of plan asset fair value of this Company is as follows:

Beginning plan asset fair value Interest income Re-measurements Plan assets returns (excl. amount that covered in net interest income) Contribution by employer Redemption or curtailments payment Ending plan asset fair value	2019 $ 3,520 36 156 628 (1,822) $ 2,518	2018
		$ 3,878 39 216 1,312 (1,925)
		$ 3,520

The assets of defined benefits held by our company are deposited in financial institutions and invested in equity securities in Taiwan and overseas within the percentages and absolute amounts stipulated by the Bank of Taiwan for the discretionary investment of the funds for specific years. The operation of the funds is under the oversight by the Labor Pension fund Supervisory Committee. The minimum yields on the funds p.a. shall not fall below the two-year time deposit rates offered by local banks. Any insufficiency shall be made up by the national treasury following the approval from competent authorities.

Classification of Fair Values for Planned Assets

Cash and cash equivalents	2019 $ 2,518	2018
		$ 3,520

B. The main assumptions of the Company’s actuarial valuation are as follows:

Discount rate Expected increase in future salaries	Dec. 31, 2019 0.75％ 2.00％	Dec. 31, 2018
		1.00％ 2.00％

The Company is exposed to the following risks due to the pension system stipulated by the Labor Standards Act:

a. The impact of the book value of the retirement pensions is as follows for any delta of each 0.25 basis points between the discount rate (or the expected increase in future salaries) and management estimates in 2019 and 2018.

Effect on present value of defined benefit obligation

Dec. 31, 2019 Discount rate Expected increase in future salaries	Actuarial assumption increased 0.25％ $ (192) $ 197	Actuarial assumption decreased 0.25％
		$ 200
		$ (190)

Dec. 31, 2018 Discount rate Expected increase in future salaries	Effect on present value of defined benefit obligation	Effect on present value of defined benefit obligation
	Actuarial assumption increased 0.25％ $ (280) $ 288	Actuarial assumption decreased 0.25％
		$ 292
		$ (278)

Since actuarial assumptions may be mutually related, the possibility of change in an only one assumption is not high. Therefore, the above sensitivity analysis may be unable to reflect the actual change situation of the current value of defined benefits. Besides, in the above sensitivity analysis, the actuary of current value of defined benefits obligations at the end of the reporting period applies projected unit credit method, measured by the same basis of defined benefits liabilities listed in the parent company only balance sheet.

b. The Company expects to contribute the amount of NT$167 thousand to the defined benefit plans within one year after December 31, 2019; the weighted average duration of defined benefits obligations is 12 years.

20. Equity

(1) Share capital - common stock

Share capital - common stock
Authorized capital Issued capital	Dec. 31, 2019 $ 6,800,000 $ 3,500,000	Dec. 31, 2018
		$ 6,800,000
		$ 3,700,000

The face value of the issued ordinary shares is NT$10 per share. Each share has one vote and the right to dividends.

Treasury stocks of NT$200,000 thousand and NT$100,000 thousand were cancelled from January 1 to December 31, 2019 and 2018, respectively.

(2) Capital surplus

Capital surplus
Premium on capital Conversion premium of corporate bonds Gains of disposal of assets Equity net value change of associates by equity method Total	Dec. 31, 2019 $ 743 460,824 1,238 3,658 $ 466,463	Dec. 31, 2018
		$ 785 487,155 1,238 3,658
		$ 492,836

In accordance with regulations in laws, the capital surplus shall not be used except for covering company losses, but concerning the overage obtained from issued stock over par value (including issuance of common stock above par value, the premium on capital stock of stock issued for merge, corporate bond conversion premium and treasury stocks transaction, etc.) and capital surplus generated from income of receiving gifts. In the absence of accumulated losses, the Company may issue cash dividends or bonus shares to existing shareholders on a pro rata basis. Per the requirements of the Securities and Exchange Act, the appropriation of capital surplus to share capital is limited to 10% of the paid-in capital.

(3) Retained earnings

A. In accordance with the Company’s Articles of Incorporation, any earnings during the year should be used to pay all the due taxes and make up the prior losses before distributions as follows:
a. Provide 10% legal reserve, but it is not applicable to the case where the legal reserve already attains the total capital amount.
b. If necessary, in accordance with regulations of laws, allowance or reversal of special reserve shall be provided.
c. The earnings during the year available for distributions, along with the undistributed earnings from previous years, shall be distributed according to the proposal from the board. The distribution to shareholders shall be no less than 5% of the distributable accumulated earnings and shall be approved by the shareholders’ meetings.
The enterprise life cycle of the Company belongs to “maturity period”. However, in order to pursue business sustainable development, respond to the future market demands and consider the future capital expenditure budget of the Company as well as maintenance stable dividend allocation, in which cash dividend shall be no lower than 10% of the total amount of shareholders’ dividend. But in case of fund requirements concerning any major investment plan, major operation change matters and productivity expansion or other major capital expenditures, etc., the board may propose it to be changed to distribution in stock dividend form in whole, and actions may be taken after a report to and consent from the shareholders’ meeting

B. Legal reserve

Per the regulations set forth by the Company Act, the Company shall appropriate 10% of after-tax earnings as the legal reserve, until the amount of legal reserve is equivalent to that of paid-in capital, or use the earnings to reverse prior losses. In the absence of losses, the portion of reserves exceeding 25% of the paid-in capital can be used to issue cash dividends or bonus shares.

C. Special reserve

Official Letter “Securities Issue” No. 1010012865 and No. 1010047490 released by the Financial Supervisory Commission and the IFRS standards provide answers to the questions regarding the appropriation, utilization and reversal of special reserve. If there is any reversal of the reduction of shareholders’ equity, the reserved portion may be used for earnings distributions.
D. The Company’s earnings distributions for 2017 and 2016 were approved by the annual general meetings on June 8, 2018 and June 8, 2017, respectively, as proposed by the board. However, the payout ratio has changed due to the cancelation of 20,000 thousand and 10,000 thousand treasury stocks, respectively. The cash dividend per share for 2018 amd 2017 was NT$0.68 and NT$0.65 , respectively.

2018	2018	2017	2017
Amount	Dividend per share (TWD)	Amount	Dividend per share (TWD)
$ 21,580 238,000	$ 0.68	$ 18,924 240,500	$ 0.65
$ 259,580		$ 259,424

E. The status for the board of the Company proposed to approve the 2019 earnings allocation proposal on March 20, 2020 is as follows:

Legal reserve Cash dividend Total	2019	2019
	Amount $ 53,896 280,000 $ 333,896	Dividend per share (TWD)
		$ 0.8

The Company’s earnings distribution for 2019 is still pending for the

approval from the annual general meeting in 2020.

(4) Other equity interest-

(4) Other equity interest-
Balance on Jan. 1, 2019 Exchange differences on translation of foreign financial statements Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income Share of loss (profit) of associates accounted for using equity method Disposal of financial assets at fair value through other comprehensive income - equity instrument Balance on Dec. 31, 2019	Exchange differences on translation of foreign financial statements	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income	Total
	$ 1,392 (8,840) －－－	$ (46,003) － 71,383 119,490 29,920	$ (44,611) (8,840) 71,383 119,490 29,920
	$ (7,448)	$ 174,790	$ 167,342

Exchange differences on translation of foreign financial statements	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income	Unrealized gains (losses) on available-for-sale financial asset	Total
$ (2,428) －	$ － 19,331	$ 22,951 (22,951)	$ 20,523 (3,620)
(2,428) 3,820 －－－	19,331 － (66,237) 31,298 (30,395)	－－－－－	16,903 3,820 (66,237) 31,298 (30,395)
$ 1,392	$ (46,003)	$ －	$ (44,611)

(5) Treasury stocks

Treasury stocks
Balance on Jan. 1, 2018 Acquired in this period Cancellation in this period Balance of Dec. 31, 2018 Acquired in this period Cancellation in this period Balance of Dec. 31, 2019	Number of shares (thousand shares) 84 27,464 (10,000) 17,548 2,452 (20,000) －	Amount
		$ 1,332 419,577 (159,536)
		261,373
		38,317 (299,690)
		$ －

A. The Company in accordance with the regulations of Article 28-2 of Securities Exchange Act, in order to maintain company credit and shareholders’ equity, purchased back treasury stocks through resolutions of the board.
B. The quantity percentage of a company in purchase back outstanding shares in accordance with the regulations of Securities Exchange Act shall not exceed 10% of the total number of shares issued by a company, and the total amount of purchase shares shall not exceed the retained earnings adding the premium of issued shares and the amount of realized capital surplus.
C. The treasury stocks held by The Company in accordance with the regulations of Securities Exchange Act shall not be pledged, nor shall it enjoy such rights as dividend allocation and voting right, etc.

21. Operating revenue

Operating revenue
Net sales revenue Construction revenue Rental and logistics revenue Total	2019 $ 960,898 1,518,732 222,207 $ 2,701,837	2018
		$ 1,114,877 33,125 225,876
		$ 1,373,878

The amount of revenue recognized at the beginning from the contractual liabilities for the period from January 1 to December 31, 2019 and 2018 are respectively NT$296,810 thousand and NT$11,172 thousand.

22. Operating costs

22.	Operating costs
23. 24.	Cost of sales Cost of construction sales Cost of rental and logistics Total Other income Interest income Dividend income Other Total Other gains and losses Loss (gain) on disposal of property, plant and equipment Loss (gain) on disposal of investment properties Loss (gain) on disposal of investments Foreign currency exchange gain (loss) Net (gain) loss on financial assets and liabilities at fair value through profit or loss Miscellaneous expense Impairment loss Total	2019 $ 922,026 1,026,264 91,799 $ 2,040,089 2019 $ 20,596 115,727 8,177 $ 144,500 2019 $ 388 696 (29,998) (2,641) 1,240 (2,481) (1,494) $ (34,290)	2018
			$ 935,194 17,780 90,364
			$ 1,043,338
			2018
			$ 31,756 113,936 9,710
			$ 155,402
			2018
			$ 30 －－ 23,691 44 (14,273) －
			$ 9,492

25. Finance costs

Finance costs
Interest of bank loan Interest of lease liabilities Less: capitalized interest Total Interest rate (%) of capitalized interest	2019	2018 $ 32,936 － (11,066) $ 21,870 2.07
	$ 23,026 544 (3,940)
	$ 19,630
	2.07

26. Extra information on the items with the expense characteristics

The employee benefits, depreciation, depletion and amortization expenses incurred in this period are summarized below:

	2019			2018
Operating costs	Operating expense	Total	Operating costs $ 106,315 7,354 4,503 － 1,746 $ 119,918 $ 101,424	Operating expense	Total
$ 92,622 7,048 4,440 － 2,649	$ 46,080 4,179 2,054 22,610 1,255	$ 138,702 11,227 6,494 22,610 3,904		$ 41,869 4,184 2,132 18,969 790	$ 148,184 11,538 6,635 18,969 2,536
$ 106,759	$ 76,178	$ 182,937		$ 67,944	$ 187,862
$ 102,837	$ 20,811	$ 123,648		$ 14,582	$ 116,006

(A) As of December 31, 2019 and 2018, the Company had 202 and 216 employees,

respectively. There were 7 non-employee directors and 5 non-employee directors, respectively.

(B)The Company’s average employee benefit expense and the Company’s average salary expense for the year ended December 31, 2019 and 2018 were NT$822 thousand, NT$711 thousand, NT$800 thousand and NT$702 thousand, respectively. The Company’s average salary expense adjustment for the year ended December 31, 2019 increased by 1%.

The compensations to employees and the remunerations to directors and supervisors determined by the board on March 20, 2020 for the year 2019 and on March 15, 2019 for the year 2018 are as follows:

Compensations to employees Remunerations to directors and supervisors	2019	2019	2018	2018
	Amount	Estimated proportion	Amount	Estimated proportion
	$ 5,613 5,613	1％ 1％	$ 2,661 2,661	1％ 1％

The Company shall allocate from annual profits no less than 1% for compensations to employees and no more than 2% for remunerations to directors and supervisors. However, annual profits should be prioritized for the reversal of cumulated losses if any.

The abovementioned compensations to employees may be paid with cash or shares. The employees include the employees of subsidiaries which meet the criteria set by the board. However, the remunerations to directors and supervisors shall be paid in cash only.

Any changes to the published parent company only financial statements shall be treated as changes to accounting estimates and adjusted during the following year. There was no difference between the distributed amount of compensations to employees and remunerations to directors and supervisors for 2018 and the recognized amount on the parent company only financial statements for 2018.

The annual general meeting of the Company on June 8, 2018 approved the distributions of bonuses to employees at NT$2,024 thousand and the remunerations to directors and supervisors at NT$2,024 thousand for 2017. There was no difference between the distributed amount and the recognized amount on the parent company only financial statements for 2017.

Please refer to the details published on TSE Market Observation Post System for the information regarding the decisions by the board and annual general meetings on compensations to employees and remunerations to directors and supervisors.

27. Income tax

(1) Income tax recognized in profit & loss

The income tax expense listed as profit & loss is composed of as follows:

Income tax current period: Occurred in current year Additionally imposed undistributed earnings Paid for land value increment tax Deferred income tax: Occurred in current year Income tax expense listed as profit & loss The accounting benefit and income as follows: Income tax calculated according to the regulated tax rate of before-tax net income The effect of tax in reconciliation items of income tax: When determining taxable income, adjustments should be made to increase (decrease) Exemption of domestic securities transaction income Tax-exempt income Previous years adjustments Income tax expense (gain) current period	2019 2018 $ 1,265 $ (15,072) － (11,225) (31,289) (148) (30,024) (26,445) 18,971 (18,522) $ (11,053) $ (44,967) tax expense of current period are adjusted 2019 2018 $ 110,002 $ 52,154 (10,679) (19,363) 303 8,099 (99,625) (25,106) (1,266) (712) $ (1,265) $ 15,072	2018
		$ (15,072) (11,225) (148)
		(26,445) (18,522)
		$ (44,967)
		$ 52,154 (19,363) 8,099 (25,106) (712)
		$ 15,072

The accounting benefit and income tax expense of current period are adjusted as follows:

(2) Income tax expense recognized in other comprehensive income

Remeasurement of defined benefit plans Unrealized loss on valuation of investments in equity instruments measured at fair value through other comprehensive income Exchange differences on translation of foreign financial statements Unrealized loss on valuation of investments in debt instruments measured at fair value through other comprehensive income Income tax related to other comprehensive income	2019 $ (508) 51 2,210 (3,914) $ (2,161)	2018
		$ 1,175 4,813 (845) 3,914
		$ 9,057

(3) Deferred tax assets and liabilities

The analysis on deferred income tax assets and liabilities in balance sheet is as

follows:

follows:
Net defined benefit liability Unrealized loss on valuation of investments in equity instruments measured at fair value through other comprehensive income Exchange differences on translation of foreign financial statements Unrealized loss on valuation of investments in debt instruments measured at fair value through other comprehensive income Unrealized exchange loss Other Tax loss carry forwards Deferred income tax assets Net defined benefit liability Unrealized loss on valuation of investments in equity instruments measured at fair value through profit or loss Exchange differences on translation of foreign financial statements Land value increment tax Deferred income tax (liabilities)		2019
	Balance, beginning of year	Recognized in profit (loss)	Recognized in other comprehensive income	Balance, end of year
	$ 3,653 216 － 3,914 8,008 4,839 －	$ －－－－ (4,006) 7,860 12,115	$ (508) 51 1,862 (3,914) －－－	$ 3,145 267 1,862 － 4,002 12,699 12,115
	$ 20,630	$ 15,969	$ (2,509)	$ 34,090
	(3,045) (55) (348) (166,357)	2,947 55 －－	－－ 348 －	(98) －－ (166,357)
	$(169,805)	$ 3,002	$ 348	$(166,455)

	2018	2018
Balance, beginning of year	Recognized in profit (loss)	Recognized in other comprehensive income	Balance, end of year
$ 2,478 － 497 － 25,086 3,258	$ －－－－ (17,078) 1,581	$ 1,175 216 (497) 3,914 －－	$ 3,653 216 － 3,914 8,008 4,839
$ 31,319	$ (15,497)	$ 4,808	$ 20,630
－－－ (166,357) (4,672)	(3,045) (55) －－ 75	－－ (348) － 4,597	(3,045) (55) (348) (166,357) －
$ (171,029)	$ (3,025)	$ 4,249	$(169,805)

(4) Information on Unused Loss Carryforwards

Loss carryforwards as at December 31, 2019 are as follows:

Loss carryforwards	Balance of unused loss carryforwards $ 12,115	Final deductible year 2029

(5) The Company’s income tax settlement application cases approved by the competent authority are approved until 2016.

28. EPS

(1) Basic earnings per share

Basic earnings per share
Net income for the period attributable to owners of the Corporation Weighted average number of ordinary shares (in thousand shares) Basic EPS (NT dollars)	2019 $ 538,957 350,000 $ 1.54	2018
		$ 215,802
		367,033
		$ 0.59

(2) Diluted earnings per share

Diluted earnings per share
Net income for the period attributable to owners of the Corporation Weighted average number of ordinary shares (in thousand shares) Potentially ordinary stock- Employee bonus (in thousand shares) Number of shares of diluted EPS (in thousand shares) Diluted EPS (NT dollars)	2019 $ 538,957 350,000 336 350,336 $ 1.54	2018
		$ 215,802
		367,033 204
		367,237
		$ 0.59

If the Company can choose to distribute stocks or cash as the bonus for the employees, when calculating the earnings per share, the distribution of shares to the employees should be taken into consideration. In addition, the potential common shares which will dilute the earnings should be added into the weighted average number to calculate the diluted earnings per share. The distributed number of shares is estimated by the closing price of the common shares at the end of the reporting period (the effect of exclude right and exclude dividends is considered). The dilutive effect of the potential shares distributed to the employees will be taken into consideration when calculating the diluted EPS before the resolution concerning the number of shares to be delivered as bonus for employees is made in the shareholder meeting the following year.

29. Capital Management

The enterprise life cycle of the Company belongs to “maturity period”. However, in order to pursue business sustainable development, respond to the future market demands and consider the future capital expenditure budget of the Company as well as maintenance stable dividend allocation, on the whole, the Company applies a prudent risk management policy.

30. Financial instruments

(1) The types of financial instruments

The types of financial instruments
Financial assets Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income Amortized cost Cash and cash equivalents Trade receivables Other financial assets Refundable deposits Total Financial liabilities Amortized cost Short-term loans Short-term bills payable Trade payables Guarantee deposits received Total	Dec. 31, 2019 $ － 2,233,087 900,150 128,987 185,214 8,322 $ 3,455,760 $ 860,000 399,548 234,689 42,401 $ 1,536,638	Dec. 31, 2018
		$ 16,041 2,121,051 735,031 191,595 655,187 11,384
		$ 3,730,289
		$ 2,020,000 719,643 315,199 44,361
		$ 3,099,203

(2) Fair values of financial instruments

A. Financial instruments not measured with the fair value

The financial assets and financial liabilities not measured by fair values of this company include cash and equivalent cash, accounts receivable, other financial assets, short-term loan, short-term bonds payable and accounts payable. The maturity dates of this kind of financial products are rather short that their book values should belong to a reasonable foundation of estimating fair values. The above financial products shall not include refundable deposits and deposit received either, because their repayment dates are uncertain; therefore, their fair values are evaluated by the book values in balance sheets.

B. Fair value measurement of recognitions in balance sheet
The following table provides related analysis of financial instruments measured by fair values after original recognition, and the observable levels of fair values are divided into the first to the third level.
a. The first-level fair value measurement refers to an open offer of the same asset or liability from an active market (without being adjusted).
b. The second-level fair value measurement refers to a derived fair value of an observable input value belong to the said asset or liability either directly (i.e., price) or indirectly (i.e., to be derived from price) in addition to a first-level open offer.
c. The third-level fair value measurement refers to a derived fair value of an input value of asset or liability not based on observable market data (non-observable input value) as the evaluation technique.
C. Concerning the financial instruments measured by fair values, the basic classification analysis of the Company in accordance with the nature, characteristics and risk as well as fair value level of asset and liability shall be as follows:
a. The financial asset and liability measured by fair value on repeatable foundation:

foundation:
Financial assets at fair value through other comprehensive income Stock of Listed (OTC) companies Stock of emerging companies Stock not classified to listed (OTC) and emerging companies Total		Dec. 31, 2019
	Level 1	Level 2	Level 3	Total
	$ 2,123,296 －－	$ － 3,736 －	$ －－ 106,055	$ 2,123,296 3,736 106,055

	$ 2,123,296	$ 3,736	$ 106,055	$ 2,233,087

Dec. 31, 2018

Level 1	Level 2	Level 3	Total
$ 16,041	$ －	$ －	$ 16,041
1,963,624 －－ 14,115	－ 2,627 －－	－－ 140,685 －	1,963,624 2,627 140,685 14,115

$ 1,977,739	$ 2,627	$ 140,685	$ 2,121,051

b. The financial asset and liability measured by fair value on non-repeatable

foundation: none

D. The first-level fair value measurement item applies a market offer as the fair

value input value, with breakdown as follows:

Item Stock of Listed (OTC) companies fund and Financial bond	Market quoted
	Close price The net assets

E. The second-level fair value measurement item applies the observable input

values of recent transaction price and offer data of GreTai Securities Market,

to serve as the foundation of evaluating fair values.

F. There was no change between Level 1 and Level 2 fair value measurements

in 2019 and 2018.

G. Adjustment of financial assets with the third-level fair value measurement:

Beginning balance Transferred from IFRS 9 Capital return due to disinvestment Listed to other comprehensive income of this year Ending balance	2019 $ 140,685 － (8,000) (26,630) $ 106,055	2018
		$ 133,818 138,048 (7,000) (124,181)
		$ 140,685

H. Level 3 fair value measurement is based on net asset values. The Company takes great caution in the selection of valuation models and valuation parameters for the key, non-observable values. Therefore, the measurement of fair values should be reasonable. The use of different valuation models or valuation parameters may result in different numbers. For example, If the evaluation parameter's share price net multiplier increases, the market liquidity discount decreases, and the weighted average capital cost discount rate decreases, the fair value of the investment will be increased.

(3) Objective of financial risk management

The financial risk management of the Company is to manage currency exchange rate risk, interest rate risk, credit risk and liquidity risk related to operation activities. In order to reduce related financial risks, the Company has devoted to identification, evaluation and avoiding uncertainty of market, to reduce any potential unfavorable impact of market changes on the corporate financial performance.

The important financial activities of the Company are specified by the board and in accordance with related specifications and double checked through an internal control system. During the execution period of financial planning, the Company shall scrupulously observe the related financial operation procedures concerning comprehensive financial risk management and division of authority and responsibility.

(4) Market risk

The Company mainly exposes to such market risks as changes in foreign currency exchange rate and changes in interest rate, etc.

A. Foreign currency exchange rate risk

The foreign currency exchange rate risk of the Company mainly comes from Cash and cash equivalents, accounts receivable, other payables priced by foreign currency exchange, Financial assets at fair value through profit or loss as fund, Financial assets at fair value through other comprehensive income as overseas company stock and financial bond, and foreign currency time deposit with maturity period above three months.

The information concerning foreign currency financial assets and liabilities under material impacts of foreign currency exchange rate fluctuation shall be as follows:

	Dec. 31,2019			Dec. 31,2018
foreign currency	Exchange rate	Amount	foreign currency	Exchange rate	Amount
18,822 9,647 89,832 31,007 653 296 14 207	30.03 3.836 0.2751 4.296 30.03 30.13 3.896 4.346	565,217 37,007 24,713 133,204 19,600 8,908 56 901	38,762 3,041 150,155 24,166 2,735 229 847 40	30.67 3.894 0.2764 4.448 30.67 30.77 3.954 4.498	$1,186,500 11,776 41,374 107,304 83,896 7,047 3,351 182

The sensitivity analysis concerning foreign currency exchange rate risk is calculated mainly for the monetary items of foreign currency at the end of the financial reporting period. When the appreciation/ depreciation of NT Dollar vs. foreign currency reaches 1%, the pre-tax profit and loss of the Company from January 1 to December 31, 2019 and 2018 would separately increase/decrease by NT$7,503 thousand and NT$13,364 thousand, respectively.

Due to a large variety and volumes of foreign currency transactions, the Company discloses the exchange gains/losses for the summary of monetary items. The recognized foreign currency gain/loss (realized and unrealized) was NT$2,641 thousand for 2019 and NT$23,691 thousand for 2018.

B. Interest rate risk

The interest rate risk refers to the risk in fair values of non-derivative financial instruments cause by changes of market interest rate. The interest rate risk of the Company mainly comes from short-term loans and short-term bonds payable.

Concerning the sensitivity analysis of interest rate risk, it is calculated on basis of the fixed interest rate loan at the end of the financial reporting period, and it is assumed to be held for one year. In case the interest rate rises/drops 1%, the pre-tax profit and loss of the Company from January 1 to December 31, 2019 and 2018 would separately decrease/ increase by NT$12,595 thousand and NT$27,396 thousand, respectively.

C. Other price risks

The price risk of equity instruments of the Company mainly comes from the investment classified as Financial assets at fair value through other comprehensive income; and all major equity instrument investments may only be conducted after the approval of the board of the Company.

Concerning the sensitivity analysis of equity instrument price risks, it is calculated on basis of the changes in fair values at the end of the financial reporting period. In case the price equity instruments rises/drops 1%, the profit and loss of the Company from January 1 to December 31, 2019 and 2018 would separately increase/decrease by NT$22,331 thousand and NT$21,069 thousand, respectively.

(5) Credit risk management

The credit risk management refers to the opposing party of trade violates contract obligations and causes risks of financial loss to the Company. The credit risk of the Company comes mainly from the accounts receivable generated from operation activities, and bank deposits generated from investment activities and other financial instruments. Operation related credit risks and financial credit risks are under separate management.

A. Operation related credit risks

In order to maintain the quality of accounts receivable, the Company already establishes the procedures of operation related credit risks. The risk evaluation of an individual customer considers such numerous factors with potential impacts on customer payment abilities as the financial status of the said customer, internal credit ratings of the Company, historical trade record and current economic status, etc. The Company would also in due time uses certain credit enhancement tools, such as sales revenue received in advance and credit insurance, etc., to reduce credit risks of specific customers.

Up to December 31, 2019 and December 31, 2018, the accounts receivable balances of the top 10 major customers account for the accounts receivable balances of the Company respectively as 72% and 74%; the risk concentration risks of the rest accounts receivable are relatively not major.

B. Financial credit risk

The credit risks of bank deposit and other financial instruments are measured and supervised by the Finance Department of the Company. Since the trade parties of the Company are all domestic banks with commendable credit, there is no suspicion of major contract performance; therefore, there is no major credit risk.

(6) Liquidity risk management

The object of liquidity risk management of the Company is to maintain cash and equivalent cash required for operation, securities with high liquidity, and sufficient bank financing quota, etc., to ensure the Company to possess sufficient financial flexibility, operation fund sufficient to cope up with the financial liabilities with agreed repayment periods.

A. The liquidity of non-derivative financial assets and liabilities

			Dec. 31, 2019
Less than 1 year	2～3 years		4～5 years	Over 5 years		Total
	$ －－－ 10,879 17,525		$ －－－ 10,879 4,661	$ －－－ 21,759 4,727		$ 860,000 399,548 234,689 49,279 42,401
$ 1,515,487	$ 28,404		$ 15,540	$ 26,486		$ 1,585,917
			Dec. 31, 2018
Less than 1 year	2～3 years		4～5 years	Over 5 years		Total
	$ 400,000 －－ 17,265		$ －－－ 5,360	$	－－－ 4,727	$ 2,020,000 719,643 315,199 44,361
$ 2,671,851	$ 417,265		$ 5,360	$	4,727	$ 3,099,203

		$ － 90,000			$ － 90,000
		$ 90,000			$ 90,000
		$ 1,090,000 1,850,000			$ 2,170,000 560,000
		$ 2,940,000			$ 2,730,000
		$ 170,000 －			$ 570,000 140,000
		$ 170,000			$ 710,000

B. Loan commitments

31. Related party transaction

(1) Name and relation ship with related parties

Name of related parties Ban Chien Development Co., Ltd. Formosan Construction Corp. (Taiwan) Eurogear Corporation Chen Hsi Investment CO, LTD Hung He Development CO, LTD HSU, ZHEN-TSAI	Relationship with the Company
	The Company’s subsidiaries. Investee company accounted for using the equity method The Company’s institutional director. The president is the spouse of the general manager of the Company The president is the spouse (1st degree of kinship) of the Company’s president President of the Company

(2) Major transaction with related parties

A. Operating revenue -Rental

Operating revenue-Rental
Other Guarantee deposits received	2019 $ 1,186 Dec. 31, 2019 $ 274	2018
		$ 1,186
		Dec. 31, 2018
		$ 274

The related enterprise leases the office to the Company, and the lease content is determined by the agreement between the two parties, and the rent is collected monthly.

B. Lease agreement

Lease agreement signed by the Company with Formosan Construction Corp. (Taiwan), Eurogear Corporation, Chen Hsi Investment CO, LTD., Ltd. and Hung He Development CO, LTD in December 2018., with the lease period as of January 1, 2018 to December 31, 2028. The lease agreement is based on the Consumer Price Index (CPI) in the sixth, and it adjusts the rent according to the accumulated average CPI increase in the previous year. The Company does not have a preferential purchase right for the real property at the end of the lease term. The rent is the monthly payment.

Dec. 31, 2019

Formosan Construction Corp. (Taiwan) Eurogear Corporation Chen Hsi Investment CO, LTD Hung He Development CO, LTD Total Refundable deposits Interest expense Depreciation expense Rental expense	Right-of-use assets $ 9,212 8,834 18,756 9,595 $ 46,397 Dec. 31, 2019 $ 1,167 2019	lease liabilities
		$ 9,262 8,881 18,857 9,647
		$ 46,647
		Dec. 31, 2018
		$ 1,167
		2018
	$ 534	$ －
	$ 5,155	$ －
	$ －	$ 5,440

C. As of December 31, 2019 and December 31, 2018, the ownership of book amount are respectively NT$94,241 thousand and NT$94,553 thousand for the farmland at Dahu Section, which are held under the name of the major management of the Company. Its ownership certificate is under custody of the Company, and its pledge is set to the Company for security purpose.

(3) Reward to major management

The remuneration information to board directors and other major management members shall be as follows:

members shall be as follows:
Short-term benefits Retirement benefit Total	2019 $ 50,479 610 $ 51,089	2018
		$ 48,441 666
		$ 49,107

32. Pledged assets

The following assets are already provided to serve for guarantee of financial industry loans, material purchase and international logistics business, with the book amounts as follows:

book amounts as follows:
Construction project ─Real estate under construction Other financial assets Property, plant and equipment Investment property - house and land Total	Dec. 31, 2019 $ 1,960,691 20,000 287,640 192,872 $ 2,461,203	Dec. 31, 2018
		$ 1,955,191 20,000 287,640 200,219
		$ 2,463,050

33. Material contingent liabilities and unrecognized contract promise: None

34. Important disaster loss: None

35. Important subsequent events

The Company in order to maintain company credit and shareholders’ equity, bought back 20,000 thousand shares of the Company from open market through resolutions of the board on March 20, 2020, with the scheduled buy-back period as March 23, 2020 to May 22, 2020, and the buy-back price range as $13 to $18; besides, if the stock price dropped below the lower limit of buy-back price range as $13, shares could be still be bought back.

36. Additional disclosed items

(1) Information regarding the material transaction items
A. The status of lending capital to others: None

B. The status of endorsement and guarantee for others:

No. (note 1)	Company name of the endorsement / guarantee provider	Recipient of the endorsement/ guarantee	Recipient of the endorsement/ guarantee	Endorsement / guarantee quota for a individual enterprise (note 3)	Max. balance of the endorsement/ guarantee this period	Ending balance of the endorsement/ guarantee	Actual drawing amount	The endorsement / guarantee amount guaranteed by properties	Percentage of accumulated endorsement / guarantee amount in net value of the latest financial statements	Max. limit of the endorsement / guarantee (note 3)	Endorsement / guarantee from parent company to subsidiary	Endorsement / guarantee from subsidiary to parent company	Endorsement / guarantee to Mainland China
		Company name	Relation
0	The Company	950 Property LLC	Note 2	$ 1,620,996	$ 825,378 (USD26,054)	$ 784,995 (USD26,054)	$ 63,424 (USD2,105)	－	7.26％	$ 3,241,992	－	－	－

Note 1: The explanation for the number column is as follows:

(1) Put “0” for the company.
(2) Put the serial No. starting from 1 for the investees by company category.
Note 2: The relationships between endorsement/ guarantee provider and recipient: A company that is endorsed by each of the contributing shareholders in accordance with their shareholding ratio because of the joint investment relationship.
Note 3: Accoridng to the Operating procedures of endorsement and guarantee for others, the Company’s endorsement/ guarantee total amount should be no more than 30% of this company’s net value, and its endorsement/ guarantee amount to an individual enterprise should be no more than 15% of the Company’s net value.

Note 4 ： US$1 ＝ NT$30.13

C. The status of securities held at the end of the period

Name of this Company	Type and name of securities	Relation with securities issuer	Item listed on book		The end of the	period		Remarks
				Share / unit numbers	Book value	Ratio of share holding %	Fair value
The Company	SinoPac Financial Holdings Company Limited - Stock Nan Ya Plastics Corporation - Stock Formosa Chemicals & Fibre Corporation- Stock Far Eastern New Century Corporation- Stock Far Eastern Group - Stock Far Eas Tone Telecommunications Co., Ltd.- Stock Formosa Plastics Corporation- Stock Huaku Development Co., Ltd.- Stock E. SUN Financial Holding Co., Ltd.- Stock ASUSTeK Computer Inc.- Stock WPG Holdings - Stock TSEC Corporation- Stock Formosa Petrochemical Corp- Stock Shine More Technology Materials Corporation., Ltd.- Stock Fubon Securities Co., Ltd. Continental Holdings Corp. (CHC) - Stock		Financial assets at fair value through other comprehensive income - current 〃〃〃〃〃〃〃〃〃〃〃〃〃〃〃	35,969,700 3,847,900 4,599,170 4,101,761 5,266,447 2,007,000 583,000 1,280,000 1,510,076 200,000 283,600 5,984,888 1,678,000 1,158,250 690,000 2,205,000	467,606 280,127 402,427 122,438 137,191 144,705 58,183 118,528 42,131 46,300 11,089 45,485 163,605 4,228 6,493 29,326	0.32 0.05 0.08 0.08 0.37 0.06 0.01 0.46 0.01 0.03 0.02 1.58 0.02 1.52 0.28 0.27	$ 467,606 280,127 402,427 122,438 137,191 144,705 58,183 118,528 42,131 46,300 11,089 45,485 163,605 4,228 6,493 29,326	Note Note Note Note

Name of this Company	Type and name of securities	Relation with securities issuer	Item listed on book		The end of the	period
				Share / unit numbers	Book value	Ratio of share holding %	Fair value
The Company	Pegatron Corporation- Stock Brightek Optoelectronic Co., Ltd.- Stock Eslite Corporation- Stock Yu Chi Venture Investment Co., Ltd.- Stock Formosan Chemical Industrial Co.- Stock Formosan Glass & Chemical Industrial Co.- Stock Tai Yang Co., Ltd. - Stock Formosan Rubber Group Inc. (Ningpo)- Stock Tashee Golf & Country Club -preferred stock	Chairman of Formosan Rubber Group Inc. (Ningpo) is the brother to Chairman of Formosan Rubber Group Inc.	Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - non-current 〃〃〃〃〃〃〃	635,000 267,241 1,604,379 2,700,000 22,516 10,000 111,395 － 1	43,434 3,736 16,792 29,106 14,030 4,712 7,415 19,600 14,400	0.02 0.44 1.65 10.00 2.25 5.13 1.24 12.86 －	$ 43,434 3,736 16,792 29,106 14,030 4,712 7,415 19,600 14,400
Ban Chien Development Co., Ltd.	SinoPac Financial Holdings Company Limited - Stock CHONG HONG CONSTRUCTION CO., LTD. - Stock		Financial assets at fair value through other comprehensive income - current 〃	42,062,322 560,000	546,810 45,528	0.37 0.19	546,810 45,528
FRG US Corp.	TRIMOSA HOLDINGS LLC- Equity		Financial assets at fair value through other comprehensive income - non-current	－	448,037	14.67	448,037

Note: The situation of being provided to financial loan business trust in detail is shown as in Note 8.

D. The same securities in which the accumulated amount of buying or selling reached NT$300 million or was more than 20% of the
paid-up capital: None
E. The amount acquiring real estate which reached NT$300 million or was over 20% of the paid-up capital: None
F. The amount disposing property which reached NT$300 million or was over 20% of the paid-up capital: None
G. The amount of purchases or sales from or to related parties which reached NT$100 million or was over 20% of the paid-up capital:

None

H. The amount of related party receivables which reached NT$100 million or was more than 20% of the paid-up capital: None
I. Information regarding transactions of derivative financial products: None
J. Business relations, important transaction current conditions between the parent company and its subsidiaries: None

(2) Related information to re-investment businesses

Investing company	Investee	Area	Business items	Original investment amount	Original investment amount	Holdingat the end of theperiod	Holdingat the end of theperiod	Holdingat the end of theperiod	Investee’s profit (loss) of current period	Investment profit (loss) recognized current period	Remarks
				End of period for current period	End for last year	Share	Ratio (%)	Book value
The Company	Ban Chien Development Co., Ltd. Da-Guan Recreation Company KINGSHALE INDUSTRIAL LIMITED FRG US Corp. Formosan Construction Corp. (Taiwan) Fenghe Development Co., Ltd. Rueifu Development Co., Ltd.	Taiwan Taiwan Hong Kong U.S.A. Taiwan Taiwan Taiwan	Consign a contractor to build residential and commercial building for lease and sale Trading on golf driving range, playground, sports equipment Investment Real estate investment, development and rental and sales of premises. Consign a contractor to build commercial building and public housing for lease and sale Consign a contractor to build residential and commercial building for lease and sale International trade, investment consultancy, office building for lease and building/land brokerage.	$ 560,000 63,007 34 460,142 75,979 59,850 483	$ 560,000 63,007 34 221,224 75,979 59,850 483	56,000,000 4,800,000 9,999 7,506,000 7,597,927 3,990,000 48,260	100.00 80.00 99.99 100.00 26.20 39.90 48.26	$ 647,674 (4,069) － 448,196 38,843 32,009 6,712	$ 26,002 (33) － (739) 5,723 10,496 2,195	$ 26,002 (26) － (739) 2,028 4,188 1,060	Subsidiary Subsidiary Subsidiary Subsidiary

(3) Information of the investment in China: None

37. Department information

The Company has provided the operating segments disclosure in the consolidated

financial statements.

STATEMENT OF CASH AND CASH EQUIVALENTS

DECEMBER 31, 2019

DECEMBER 31, 2019	DECEMBER 31, 2019	DECEMBER 31, 2019
STATEMENT 1
Item	Description	Amount
Cash on hand Petty cash Checking accounts Savings accounts Cash equivalent Commercial paper Time deposits with maturity	Including RMB 20 thousand, exchange rate of $4.296 Including USD1,085 thousand, exchange rate of $30.03 RMB 18,642 thousand, exchange rate of $4.296 HKD 9,599 thousand, exchange rate of $3.836 JPY78,284 thousand, exchange rate of $0.2751 EUR 8 thousand, exchange rate of $33.540 GPB 1 thousand, exchange rate of $39.320 Expiration date 2020/01/10～2020/02/19 Interest rates at 2.10％～2.95％ Expiration date 2020/01/02～2020/03/18 Interest rates at 2.05％～2.20％	$ 304 275 62,796 312,469 224,006 300,300
Total		$ 900,150

STATEMENT OF FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - CURRENT

DECEMBER 31, 2019

STATEMENT 2

Name of Securitie	Share / unit numbers	Par value	Total price	Rates	Acquisition	Accumulated impairment	Fair value	Fair value	Remarks
							Unitprice	Totalprice
Stock of domestic listed (OTC) companies SinoPac Financial Holdings Company Limited - Stock Nan Ya Plastics Corporation - Stock Formosa Chemicals & Fibre Corporation- Stock Far Eastern New Century Corporation- Stock Far Eastern Group - Stock Far Eas Tone Telecommunications Co., Ltd.- Stock Formosa Plastics Corporation- Stock Huaku Development Co., Ltd.- Stock E. SUN Financial Holding Co., Ltd.- Stock ASUSTeK Computer Inc.- Stock WPG Holdings - Stock TSEC Corporation- Stock Formosa Petrochemical Corp- Stock Shine More Technology Materials Corporation., Ltd.- Stock Fubon Securities Co., Ltd. Continental Holdings Corp. (CHC) - Stock Pegatron Corporation- Stock	35,969,700 3,847,900 4,599,170 4,101,761 5,266,447 2,007,000 583,000 1,280,000 1,510,076 200,000 283,600 5,984,888 1,678,000 1,158,250 690,000 2,205,000 635,000	10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10	$ 359,697 38,479 45,992 41,018 52,664 20,070 5,830 12,800 15,101 2,000 2,836 59,849 16,780 11,583 6,900 22,050 6,350	－－－－－－－－－－－－－－－	$ 287,351 283,471 455,604 135,008 148,502 131,456 45,532 81,481 20,084 57,428 10,878 82,256 174,618 9,795 9,979 34,419 36,168	$ －－－－－－－－－－－－－－－－－	13.00 72.80 87.50 29.85 26.05 72.10 99.80 92.60 27.90 231.50 39.10 7.60 97.50 3.65 9.41 13.30 68.40	$ 467,606 280,127 402,427 122,438 137,191 144,705 58,183 118,528 42,131 46,300 11,089 45,485 163,605 4,228 6,493 29,326 43,434	Note Note Note Note
Total			$ 719,999		$ 2,004,030	$ －		$ 2,123,296

Note: The situation of being provided to financial loan business trust in detail is shown as in Note 8.

STATEMENT OF NOTES RECEIVABLE, NET

DECEMBER 31, 2019

				STATEMENT 3
Client Name	Description	Amount		Remarks
		Subtotal	Total
Non related parties： Client A Client B Others Total Less: Loss allowance	Payment for goods 〃〃	$ 19,833 7,376 8,228	$ 35,437	The amount of individual client included in others does not exceed 5% of the account balance.
			35,437 (355)
Net			$ 35,082

STATEMENT OF ACCOUNTS RECEIVABLE, NET

DECEMBER 31, 2019

STATEMENT 4

				STATEMENT 4
Client Name	Descriptio n	Amount		Remarks
		Subtotal	Total
Non related parties： Client A Client C Client D Client E Client F Client G Others Less: Loss allowance	Payment for goods 〃〃〃〃〃 Payment for goods and real property	$ 13,491 9,316 5,263 9,030 18,701 5,840 35,788	$ 97,429 (4,568)	CNY 2,169 thousand USD 175 thousand USD 301 thousand USD 623 thousand USD 194 thousand The amount of individual client included in others does not exceed 5% of the account balance.
Net			$ 92,861

STATEMENT OF INVENTORIES

DECEMBER 31, 2019

STATEMENT 5

Item	Description	Amount	Amount	Remarks
		Cost	Net Realizable Value
Raw materials Work-in-process Finished goods Subtotal Less: allowance for loss	Chemical raw materials and Original cloth, etc. Rubber Sheet, Eco-Friendly Synthetic Leather, Synthetic Leather, Rubberized fabric machining, and Rubber raw materials and Plastic raw materials, etc. Rubber Sheet, Eco-Friendly Synthetic Leather, and Synthetic Leather, etc.	$ 173,340 21,548 144,983	$ 114,085 21,345 121,817	Net realizable value is the estimated except that raw materials are based on replacement cost, the selling price of inventories less all estimated costs of completion and costs necessary to make the sale.
		339,871 (82,624)	$ 257,247

Net		$ 257,247

STATEMENT OF OTHER FINANCIAL ASSETS-CURRENT

DECEMBER 31, 2019

STATEMENT 6

			STATEMENT 6
Item	Description	Amount	Remarks
Pledged time deposits Pre-sale housing project trust funds Less: maturity over year transfer to noncurrent	Cooperative bank-bansin (Interest rates at 0.25％～1.115％) (Period 2017.11.02～2020.11.02) Hua nan bank la bella vita project trust fund Subtotal	$ 20,000 165,214	Guarantee of logistics business
		185,214 (20,000)
Total		$ 165,214

STATEMENT OF FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - NON-CURRENT

FOR THE YEAR ENDED DECEMBER 31, 2019

	STATEMENT 7	STATEMENT 7	STATEMENT 7	STATEMENT 7	STATEMENT 7	STATEMENT 7	STATEMENT 7	STATEMENT 7	STATEMENT 7	STATEMENT 7
Name of Securities	As of January 1, 2019		Additions		Decrease		As of December 31, 2019		Collateral	Remarks
	Shares	Amount	Shares	Amount	Shares	Amount	Shares	Fair value
Brightek Optoelectronic Co., Ltd. Formosan Chemical Industrial Co. Formosan Glass & Chemical Industrial Co. Tai Yang Co., Ltd. Formosan Rubber Group Inc. (Ningpo) Eslite Corporation Yu Chi Venture Investment Co., Ltd. Tashee Golf & Country Club	267,241 22,516 10,000 111,395 － 1,604,379 3,500,000 1	$ 2,627 13,823 7,943 4,839 31,078 30,487 35,315 17,200	－－－－－－－－	$ 1,109 207 － 2,576 －－ 1,791 －	－－－－－－ 800,000 (Note1) －	$ － 3,231 － 11,478 13,695 8,000 2,800	267,241 22,516 10,000 111,395 － 1,604,379 2,700,000 1	$ 3,736 14,030 4,712 7,415 19,600 16,792 29,106 14,400
Total		$ 143,312		$ 5,683		$ 39,204		$ 109,791

Note ： Capital return due to disinvestment.

STATEMENT OF INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

FOR THE YEAR ENDED DECEMBER 31, 2019

STATEMENT 8

Name	As of January 1, 2019	As of January 1, 2019	As of January 1, 2019	Additions	Additions	Decrease	Decrease	As of	December 31, 2019	December 31, 2019	Fair value / Net assets value	Fair value / Net assets value	Collateral
	Shares		Amount	Shares	Amount	Shares	Amount	Shares	%	Amount	Unit Price (NT$)	Total Amount
Ban Chien Development Co., Ltd. Da-Guan Recreation Company KINGSHALE INDUSTRIAL LIMITED FRG US Corp. Formosan Construction Corp. (Taiwan) Fenghe Development Co., Ltd. Rueifu Development Co., Ltd. Less：Credit balance of investments accounted for using equity method transfer to other liabilities	56,000,000 4,800,000 9,999 3,635,000 7,597,927 3,990,000 48,260 －		$ 512,002 (4,042) － 221,320 26,680 27,821 5,713 4,042	－－－ 3,871,000 －－－－	$ 135,672 －－ 226,876 12,163 4,188 999 27	－－－－－－－－	$－ 27 －－－－－－	56,000,000 4,800,000 9,999 7,506,000 7,597,927 3,990,000 48,260 －	100.00 80.00 99.99 100.00 26.20 39.90 48.26 －	$ 647,674 (4,069) － 448,196 38,843 32,009 6,712 4,069	$ 11.57 (0.85) － 59.71 5.11 8.02 139.09	$ 647,674 (4,069) － 448,196 38,843 32,009 6,712 4,069	None None None None None None None
Total			$793,536		$379,925		$ 27			$1,173,434
Note：Increase(Decrease)		for the period including shares of profit (loss) of subsidiaries and associates, shares of other comprehensive (loss) income of subsidiaries and associates.

Note ： Increase(Decrease) for the period including shares of profit (loss) of subsidiaries and associates, shares of other comprehensive (loss) income of subsidiaries and associates.

STATEMENT OF SHORT-TERM BORROWINGS

DECEMBER 31, 2019

STATEMENT 9

Type	Explanation	Balance, End of Year	Contract Period	Range of Interest Rates (%)	Loan Commitments	Collateral	Remarks
Unsecured borrowings Secured borrowings	Chang Hwa Bank First Commercial Bank Hua Nan Bank CTBC Bank Land Bank of Taiwan The Export-Import Bank of the Republic of China Bank of Taiwan Mega International Commercial-Bank Bank of Kaohsiung Bank SinoPac Hua Nan Bank	$ 60,000 50,000 200,000 150,000 30,000 100,000 30,000 80,000 60,000 100,000 －	2019.12.30～2020.01.13 2019.12.06～2020.01.03 2019.11.20～2020.03.18 2019.11.15～2020.02.14 2019.12.11～2020.03.10 2019.10.02～2020.09.30 2019.11.22～2020.01.22 2019.10.17～2020.06.10 2019.12.29～2020.01.21 2019.12.27～2020.03.26 2015.02.10～2020.02.10	1.14 1.1 1.1 1.09 1.13 0.91 1.10 1.09 1.1 1.12 2.07	$ 200,000 170,000 300,000 300,000 300,000 100,000 150,000 150,000 200,000 180,000 950,000	Refers to Note 25
Total		$ 860,000

STATEMENT OF SHORT-TERM NOTES AND BILLS PAYABLE

DECEMBER 31, 2019

STATEMENT 10

							STATEMENT 10
Item	Guarantee/Acc epting Institution	Contract Period	Range of Interest Rates (%)		Amount		Remarks
				Issue Amount	Discount Amount	Carrying Amount
Commercial paper 〃〃〃	China Bills Mega Bills International Bills Ta Ching Bills	108/12/19～109/02/17 108/12/12～109/02/10 108/11/08～109/01/07 108/12/06～109/02/14	0.63％ 0.94％ 0.75％ 0.84％	$ 60,000 180,000 60,000 100,000	$ 86 219 13 134	$ 59,914 179,781 59,987 99,866	Land and building at Oiashui Section, Longtan as loan guarantees
Total				$ 400,000	$ 452	$ 399,548

STATEMENT OF NOTES PAYABLE

DECEMBER 31, 2019

STATEMENT 11

			STATEMENT 11
Vendor Name	Description	Amount	Remarks
Vendor A Vendor B Vendor C Vendor D Others	Payment for the purchase 〃〃〃 Payment for the purchase, expenses, etc.	$ 10,300 11,943 8,354 4,472 52,751	The amount of individual client included in others does not exceed 5% of the account balance.
Total		$ 87,820

STATEMENT OF ACCOUNTS PAYABLE

DECEMBER 31, 2019

			STATEMENT 12
Vendor Name	Description	Amount	Remarks
Vendor D Vendor E Vendor F Others	Payment for the purchase 〃〃 Payment for the purchase, processing charges, etc.	$ 1,270 2,050 1,019 15,805	The amount of individual client included in others does not exceed 5% of the account balance.
Total		$ 20,144

STATEMENT OF LEASE LIABILITIES

FOR THE YEAR ENDED DECEMBER 31, 2019

STATEMENT 13

Item	Description	Lease Term	Discount Rate	Balance End of Year
Buildings Transportation equipment	Offices Vhicles	107.12～117.12 106.4～109.4	1.09％ 1.09％	$ 46,647 322
Total Less: Current portion				46,969 (5,281)
				$ 41,688

STATEMENT OF OPERATING REVENUE

FOR THE YEAR ENDED DECEMBER 31, 2019

STATEMENT 14

			STATEMENT 14
Item	Shipments	Amount	Remarks
Sales revenue: Synthetic Leather Rubber Sheet Eco-Friendly Synthetic Leather Others Less: Sales returns Sales discounts Subtotal Rental and logistics revenue Construction revenue	3,774 thousand yards 2,851 thousand yards 3,487 thousand yards 279 thousand yards	$ 163,719 558,174 204,490 39,027 (2,855) (1,657)	The amount does not exceed 10% of the total revenue. 55 TIMELESS Project in Taipei City, Bridge Upto Zenith Project at Banqiao, and Legend River Project at Xindian
		960,898 222,207 1,518,732
Total		$ 2,701,837

STATEMENT OF OPERATING COSTS

FOR THE YEAR ENDED DECEMBER 31, 2019

STATEMENT 15

			STATEMENT 15
Item		Amount	Remarks
	Subtotal	Total
Direct material Raw material, beginning of year Add: raw material purchased Less: raw material, end of year Sale of raw materials Transferred to expenses Indirect material (Supplies) Supplies, beginning of year Add: supplies purchased Less: transferred to manufacturing expenses Direct labor Manufacturing expenses Manufacturing cost Work in process, beginning of year Add: transferred from finished goods Less: work in process, end of year Cost of finished goods Finished goods, beginning of year Add: finished goods purchased Cost of outsourcing Less: finished goods, end of year Finished goods transferred to costs Cost of outsourcing Finished goods Transferred to expenses Own product cost of sales Raw materials and supplies transferred to sales Cost of outsourcing Provision for loss on inventories Unamortized fixed manufacturing costs Total cost of sales Cost of rental and logistics Cost of construction sales	$ 205,880 492,737 (173,340) (580) (1,823)	$ 522,874 65,388 152,432	55 TIMELESS Project in Taipei City, Bridge Upto Zenith Project at Banqiao, and Legend River Project at Xindian
	2,369 (2,369)
	32,760 4,007 (21,548)
		740,694
	243,035 15,809 9,965 (144,983) (6,908) (33,607) (2,272)	755,913
		836,952 580 33,607 40,270 10,617
		922,026 91,799 1,026,264
Totaloperating costs		$ 2,040,089

STATEMENT OF SELLING EXPENSES

FOR THE YEAR ENDED DECEMBER 31, 2019

STATEMENT 16

			STATEMENT 16
Item	Description	Amount	Remarks
Wages and salaries Traveling expense Freight Selling expenses of construction Other expenses	Bridge Upto Zenith Project, Modesty Home Project, 55 TIMELESS Project, and La Bella Vita Project	$ 13,185 7,249 10,458 40,770 21,092	The amount of each item in others does not exceed 5% of the account balance.
Total		$ 92,754

STATEMENT OF GENERAL AND ADMINISTRATIVE EXPENSES

FOR THE YEAR ENDED DECEMBER 31, 2019

STATEMENT 17

			STATEMENT 17
Item	Description	Amount	Remarks
Wages and salaries Traveling expense Entertainment expense Taxes Depreciations Other expenses		$ 52,965 6,539 7,165 18,854 19,150 25,863	The amount of each item in others does not exceed 5% of the account balance.
Total		$ 130,536

STATEMENT OF RESEARCH AND DEVELOPMENT EXPENSES

FOR THE YEAR ENDED DECEMBER 31, 2019

STATEMENT 18

			STATEMENT 18
Item	Description	Amount	Remarks
Wages and salaries Traveling expense Depreciations Contracted research expense Other expenses		$ 6,069 847 1,112 3,243 1,826	The amount of each item in others does not exceed 5% of the account balance.
Total		$ 13,097

AI assistant

FRG — Audit Report / Information 2019

51973_rns_2019-11-13_a089d03b-1259-4852-8c2b-e3e642192d11.pdf

INDEPENDENT AUDITORS’ REPORT

Opinions

Basis of opinion

Key audit matters

Impairment of Property Investments

Audit procedures

Responsibility of the management and governance unit for the parent company only financial statements

Auditor’s responsibilities for the audit of the parent company only financial statements

Notes to Readers

Formosan Rubber Group Inc.

Parent Company Only Balance Sheet

Formosan Rubber Group Inc.

Parent Company Only Balance Sheet (Continued)

Formosan Rubber Group Inc.

Parent Company Only Comprehensive Income Statement

Formosan Rubber Group Inc.

Parent Company Only Statement of Changes in Equity

From Jan. 1 to Dec. 31, 2019 and 2018

Formosan Rubber Group Inc.

Parent Company Only Statement of Cash Flows

From Jan. 1 to Dec. 31, 2019 and 2018

Formosan Rubber Group Inc.

Parent Company Only Statement of Cash Flows (Continued)

From Jan. 1 to Dec. 31, 2019 and 2018

Formosan Rubber Group Inc.

Notes to Parent Company Only Financial Statements

1. Company profile

2. Date and procedure approving financial statements

3. Applicability of newly published and amended standards and interpretations

IFRS 16, Leases

Definition of a lease

The Company as lessor

The Company as lessee

is explained as follows:

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

4. Summary of significant accounting policies

(1) Compliance statement

(2) Preparation bases

(3) Foreign Currency

(4) Standards to classify current and non-current assets and liabilities

(5) Cash equivalents

(6) Inventory and real estate for sale and real estate under construction

(7) Investments accounted for under equity method

(8) Property, plant and equipment

(9) Investment property

(10) Lease

2019

A. The Company as lessor

B. The Company as lessee

2018

(11) Impairment of non-financial assets

(12) Employee benefits cost

(13) Financial Instrument

A. Financial assets

B. Impairment of financial assets

(14) Income recognition

(15) Borrowing costs

(16) Income tax

A. Current tax

B. Deferred tax

(17) Treasury stocks

5. Citical Accounting Judgements, And Key Sources Of Estimation And Uncertainty

6. Cash and cash equivalents

9. Notes and accounts receivable ,net

(1) The cost of sales related to inventory is as follows:

11. Real estate for sale and real estate under construction/ Contract liabilities

12. Other financial assets

13. Investments accounted for using equity method

(1) The investment of subsidiaries is listed as follows:

14. Property, plant and equipment

15. Lease

(1) Right-of-use assets

16. Investment property, net

B. 2018

17. Short-term borrowings

18. Short-term notes and bills payable

19. Employee pensions

FRG Audit Report / Information 2019