GPPC - Annual Report 2018 | FinancialReports.eu

Stock Code 1312

2018

Annual report

You can search the annual report in below website address http://mops.twse.com.tw the Company’s website address: http://www.gppc.com.tw

Publish date: 1 6 A p r i l , 2 0 1 9 .

I. The name, title, telephone number, and e-mail address of the spokesman or acting spokesman

Spokesman: Name: CHEN,CHING-FU Position: Vice president Tel: (02)8770-4567 Email: [email protected] Acting spokesman: Name: CHOU,CHEN-MING Position: Senior vice president Tel: (02)8770-4567 Email: [email protected]

II. The address and telephone number of the Company’s headquarters, branch offices, and factories

Company’s headquarters and factory:

Address: No. 4, Hsingkung Rd., Tashe Dist., Kaohsiung City Tel: (07)351-3911 Taipei office:

Address: No. 1-10, Sec. 4, Nanjing E. Rd., Songshan Dist., Taipei City

Tel: (02)8770-4567

III. The name, address, e-mail address, and telephone number of the agency handling shares transfer

Name: Shareholder Service Agency Department of KGI Securities Co., Ltd.

Address: No. 2-5, Sec. 1, Chongqing S. Rd., Zhongzheng Dist., Taipei City

Tel: (02)2389-2999

Website: http://www.kgieworld.com.tw/index/

IV. The name of the certified public accountant who duly audited the annual financial report for the most recent fiscal year, and the name, address, telephone number and website of said person’s accounting firm.

Name: HSIAO,YING-CHIA and WANG,WU-CHANG Office name: Crowe (TW) CPAs

Address: No. 369-10, Fuxing N. Rd., Songshan Dist., Taipei City Tel: (02)8770-5181

Website: http://www.crowehorwath.net

V. The name of any exchanges where the company’s securities are traded offshore, and the method by which to access information on said offshore securities: None.

IV. The address of the company’s website: http://www.gppc.com.tw

The quality policy of GPPC

Everyone does exactly what he says.

Your satisfaction is the only measure of my success

1. Table of content

1. Table of content	1. Table of content
One. A report to the shareholders .......................................................... 1
Two A company profile ........................................................................ 7
I. The date of incorporation ....................................................................... 7
II. The Company’s history ........................................................................... 7
Three. A	corporate governance report. ............................................... 10
I.	Organizational system ....................................................................... 10
II.	Information on the company’s directors, general manager, assistant
	general managers, deputy assistant general managers, and the
	supervisors of all the company’s divisions and branch units. ........ 12
III.	Remuneration paid during the most recent fiscal year to directors,
	supervisors, the general manager, and assistant general managers .. 22
IV.	The state of the company’s implementation of corporate governance
	........................................................................................................... 30
V.	Information on CPA professional fees ............................................. 62
IV.	Information on replacement of certified public accountant.............. 63
VII.	The information related to the Company’s chairperson, general
	manager, or any managerial officer in charge of finance or
	accounting matters has in the most recent year held a position at the
	accounting firm of its certified public accountant or at an affiliated
	enterprise of such accounting firm. ................................................ 63
VIII. Any transfer of equity interests and/or pledge of or change in equity
	interests (during the most recent fiscal year or during the current
	fiscal year up to the date of publication of the annual report) by a
	director, managerial officer, or shareholder with a stake of more than
	10 percent during the most recent fiscal year or during the current
	fiscal year up to the date of publication of the annual report. .......... 64
IX.	Relationship information, if among the company’s 10 largest
	shareholders any one is a related party or a relative within the second
	degree of kinship of another ............................................................. 66
X.	The total number of shares and total equity stake held in any single
	enterprise by the company, its directors, managers, and any
	companies controlled either directly or indirectly by the company.
	........................................................................................................... 67
Four. Information on capital raising activities .................................... 68
I. Capital and shares ................................................................................... 68
II. The Company’s issuance of corporate bonds ....................................... 76
III. The Company’s issuance of preferred stock ....................................... 77

IV. The Company’s issue of global depository receipt ............................. 78
V. The Company’s issue of employee share subscription warrants .......... 78
IV. The Company issue of new restricted employee shares ...................... 78
VII. The Company issuance of new shares in connection with mergers or
acquisitions or with acquisitions of shares of other companies ....... 78
VIII. The implementation of the company’s capital allocation plans ....... 78
Five. The overview of business operations ......................................... 79
I. A description of the business ................................................................. 79
II. An analysis of the market as well as the production and marketing
situation ............................................................................................. 88
III. The number of employees employed for the 2 most recent fiscal years,
and during the current fiscal year up to the date of publication of the
annual report, their average years of service, average age, and
education levels ............................................................................... 102
IV. Disbursements for environmental protection .................................... 102
V. Labor relations .................................................................................... 105
IV. Important contracts ............................................................................ 109
Six. The overview of the company’s financial status ....................... 110
I. Condensed balance sheets and statements of comprehensive income for
the past 5 fiscal years, showing the name of the certified public
accountant and the auditor’s opinion given thereby. ......................... 110
II. Financial analyses for the past 5 fiscal years ...................................... 114
III.Audit committee’s report for the most recent year’s financial statement117
IV. Financial statement for the most recent fiscal year ........................... 118
V. Company’s financial statement for the most recent fiscal year, certified
by a CPA .......................................................................................... 260
IV. If the Company or its affiliates have experienced financial difficulties
in the most recent fiscal year or during the current fiscal year up to
the date of publication of the annual report, the annual report shall
explain how said difficulties will affect the Company’s financial
situation. ........................................................................................... 366
Seven. A review and analysis of the Company’s financial position and
financial performance, and a listing of risks. ........................ 367
I. Financial position ................................................................................. 367
II. Financial performance .................................................................... 369
III. Cash flows ....................................................................................... 371
IV. The effect upon financial operations of any major capital
expenditures during the most recent fiscal year ............................. 373
V. The annual report shall describe the Company’s reinvestment policy
for the most recent fiscal year, the main reasons for the profits/losses

	generated thereby, the plan for improving re-investment profitability,
	and investment plans for the coming year. ..................................... 374
IV.	Assessment and Analysis of risk .................................................... 378
VII.	Other important matters. ................................................................. 379
Eight. Special items to be included ................................................... 379
I.	Information related to the Company’s affiliates ............................. 379
II.	Where the Company has carried out a private placement of securities
	during the most recent fiscal year or during the current fiscal year up
	to the date of publication of the annual report, disclose the status of
	the private placement ...................................................................... 385
III.	Holding or disposal of shares in the Company by the Company’s
	subsidiaries during the most recent fiscal year or during the current
	fiscal year up to the date of publication of the annual report ......... 386
IV.	Other matters that require additional description ........................... 386
Nine The	situations which might materially affect shareholders’ equity
or the price of the Company’s securities, has occurred during the
most recent fiscal year or during the current fiscal year up to the
date	of publication of the annual report. ....................................386

One. A report to the shareholders

I. 2018 business report:

(I) The implementation result of business plan

2018 is the most profitable year for Styrene products in recent years. Because the completion of capacity expansion by the world-level factory in Mainland China has been continuous delayed and only the small-scale factories completed their capacity expansion, the worldwide annual capacity increase is limited. Before the third quarter, the price per barrel of upstream WTI crude oil steadily maintain US$ 60 to 75 and the need from the main derivate products of downstream continues strong. The spread between the selling and variable cost price maintains in a hearthy condition likeing in the past and makes a new achievement in profit. However, from the fourth quarter, the market changed dramatically, the uncertainty caused by the China-US trade war affected the market sentimental of the downstream. The demand declining made the price greatly went down; made the profit of Styrene drop and affected the annual profits.

In the second quarter of 2018, the Company’s third Styrene factory conducted annual maintenance. The total annual manufacture is 345,000 tons, 1,500 tons less than last year. The total sales volume , including captive use, is 347,000 tons, 11,000 tons less than last year.

In the first half of 2018, it continues the up trend in the fourth quarter of 2017 for both price and quantity need. Entering the third quarter, oil prices are on the upward and the upstream raw material prices are resisting falling. The China-US trade war affected the need of home appliance and the price of ABS went down and squeezed the profit spread. In the fourth quarter, because of the Oil price plummeted and the concern of China-US trade war, the customer order began to wait and see and adhered to low-price & rigid demand oriented procurement policy. This made the sales revenue and profits towarding down.

The 2018 consolidated sales revenue of GPPC group is New Taiwan Dollar (hereinafter “NT$”) 24.74 billion, NT$ 1.39 billon more than 2017. The profit before tax is 4,060 million, 120 million less than 2017. The consolidated profit after tax is NT$ 3,150 million and NT$ 2,960 million is belong to equity owner of the Company.

The sales revenue of the Company is NT$ 20.3 billion, accounting for 82.1% of the consolidated sales revenue. The brief of 2018 sales revenue of each business is as following.

The comparison of main products is as following: The 2017 annual SM manufacture volume is 344,540 tons, 4.2%, less than it, 359,524 tons, in 2017. The 2018 SM sales quantity is 300,435 tons, 3.8% less than it 312,188, in 2017. The 2018 SM sales revenue is NT$ 11,726,280,000, 1.7% more than it, NT$ 11,532,514,000, in 2017. The 2017 annual ABS manufacture capacity is 90,718 tons, 2.9%, more than it, 88,162 tons, in 2017. The 2018 ABS sales quantity is 91,254 tons, 4.4% more than it 387,448, in 20417. The 2018 ABS sales revenue is NT$ 5,337,138,000, 7.8% more than it, NT$ 4,952,119,000, in 2017. The 2017 annual nylonmanufacture capacity is 24,725 tons, 5.1%, less than it, 26,044 tons, in 2017. The 2018 nylonsales quantity is 24,675 tons, 6.7% less than it 26,433, in 20417. The 2018 nylon sales revenue is NT$ 12,682,897,000, 38.4% more than it, NT$ 1,939,203,000, in 2017.

The 2018 total net sales revenue is NT$ 20,305,094,000, 7.3% more than in, NT$ 18,931,639,000, in 2017. The operating margin is NT$ 2,299,040,000, 6.2% more than it, NT$ 2,165,523,000 in 2017. The 2018 net profit from reinvestment is NT$ 1,239,183, 25% less than it, NT$ 1,651,640,000 in 2017. 2018 profit after tax is NT$ 2,960,106,000.

(II) The R&D status

Styrene is the Company’s core niche. It is the Company’s annual goal to extend upward to crystal Engineering Plastic Nylon 66 and extend downward to fundamentally optimize ABS quality.

This year, the Company will continue to implement the following work:

Actively optimize agglomerated PBL large particle latex. The Company goes toward three indicators, further improvement of ABS quality, active development of high temperature nylon engineering plastics, and towards energy saving and waste reduction.
From agglomerated PBL large particle latex, the Company improves it quality and Improves ABS products including plating grade, tube level, flame retardant grade, high-heeled shoes grade and high-heeled and high-rigidity grade, etc.

The Company expands the market for nylon industrial yarn and develops high temperature nylon and engineering plastic such as super tough nylon, high temperature super tough nylon, glue of flexible, water transparent grade and PPO blended to create the plastic product of nylon 66 which is high performance, high quality and high price.

II. The brief of 2018 business plan:

(I) Business policy
Seeking survival: practice sustainable development.
Seeking winning: Strengthening the sense of crisis and sticking to the survival niche.
Seeking stabilization: Do a good job in annual maintenance and rectification the project and consolidate marketing profit.
Seeking realistic: Strive to extend the existing competitive position and pursue the growth of the Company.
Seeking refinement: Enhance the added value of individuals and teams.
(II) Expected sales quantity and its basis

1. Styrene Monomer(SM)

It is expected that in 2018 there is limited new capacity increase in Mainland China. The market concerns the estimated fastest time for ZPC and Hengli Petrochemical to increase its new capacity would be in the end of fourth quarter or in the second quarter next year respectively. Therefore, the need still relies on importation. The one-month turn over of the second factory of Styrene has completed during February and March 2019. It is estimated that the annual manufacture volume is 370,000 tons.

The key point of the 2019 Styrene market is still the evolution of the Chinese market. In the first half of the year, the supply reduction of styrene due to turn over in Northeast Asia/US and Europe, it is expected to maintain a certain profit. After the annual maintenance high season period, manufacture capability returns to normal output in the second half of the year, the market is expected to be volatiled. After China officially announced the anti-dumping duty in June of last year, changes in global

trade flows also interfere with domestic prices. The negotiation result of China-US trade war and the stimulation economic policy of China value-added tax rate reduction to 13% from April, are also the key points to watch in the second half.

Acrylonitrile - Butadiene-Styrene copolymer resin (ABS)

Prospect to the first quarter 2019, It might affect the business performance because the weak upstream raw material prices and fewer working days due to Lunar calendar holidays and the low season. It is expected that there is not much new increase manufacture capacity of ABS. However, demand growth slows and supply presents a relatively weak balance, the Company holds a conservative view in business. In 2019, ABS sales will maintain full manufacture and sales (92,690MT) and flexibly adjust sales strategy and continue to perform product differentiation, expand special market, and create profit.

Hydrogen (H2)

H2 sales amounted to 9.92 million cubic meters in 2018. It is 1.3 million cubic meters more than annual estimation target, 8.60 million cubic meters.

The new pipeline used customer continue to increase new product consumption in 2019. However, it is still under trial run and certification approvedn stage and the need is unstable, the estimated sales target is still 9.94 million cubic meters.

4. Steam and electricity

The 2018 total manufacture and sales quantity is 2,013,141 tons and 161,830 tons respectively. The electricity generation is 306,214,600 kWh and 141,472,818 sales to Taipower.

The Company does not schedule annual maintenance. The planned steam manufacture and sale out is 2,110,669 tons and 161,220 respectively. The planned electricity generation and sale out is 324,144,000 KWh and 149,217,908 KWh respectively.

5. Nylon (PA)

Due to the upstream raw material of nylon 66, adiponitrile and

hexamethylenediamine, supply shortage, the supply of nylon 66 is tight. In the first quarter, due to the shortage of raw material, the price of nylon 66 continues the price trend of the end of 2017 keep in high level. In addition, the need from downstream keeps strong and makes the shortage of nylon 66 more serious. Those reasons make the price of nylon 66 in the second quarter continue to rising and in its historical high in the third quarter. In the fourth quarter, the change of international situation, such as the impact of China-US trade war, leads to weak demand and makes the price of nylon goes down. However, because the supply of raw material is still tight, the price goes down slowly. In the shortage supply of nylon 66, GPPC still can use its advantages of steady quality, localization, high speed delivery and good services to obtain the continuing support of the core customers in Taiwan the overseas customers and maintain full manufacture and sales.

In prospect of 2019, the supply of raw material of nylon 66, hexamethylenediamine, keeps tight and the supply of nylon 66 still in shortage situation. The downstream need steadily grows and generally maintains in the situation of tight supply. The future direction is to keep actively develop new application market and new specification such as industrial silk slice, textile grade products, and special grade engineering plastic and makes more diversified product list to increase the total added-value of nylon 66 product, to seek creativity in the steady situation and to make profits.

III. The Company’s future prospect:

The Company will continue to strengthen its competitiveness of the current core business. The Company focuses on its main businesses such as SM, ABS, hydrogen and nylon 66 to continue to improve the cost, efficiency, and quality and strive to expand niche sales channel. The Company constantly pursuing steady growth in quality and quantity to create profit. In addition, the Company actively researches the future development of high-value engineering plastics

and other differentiated products by the progressing R&D center. Those make a foundation of more diversified new potential business.

IV. External competition environment, regulatory environment and overall business environment impact:

In order to meet the stringent challenges of internal and external environments, the Company will continue to fulfill its commitment to achieve the target benefits. At the same time, in order to meet the high standards of industrial safety and environmental protection such as safety production, energy saving and carbon reduction, etc., in the recent two decades, the Company continuously to implement the new advanced development such as best controllable technologies by budgeting relevant capital expenditures. It is the Company’s essential operation to make environmentally friendly production methods and to honor the Company’s mission to fulfill corporate citizenship. In future prospect, the Company has gradually improved the various software and hardware construction and with hard work of our management team, the Company hopes to fulfill the shareholders’ expectation and continues to create new higher level businesses to achieve operational synergies.

Finally, we wish all shareholder sir/madam

Good health and good luck.

Responsible staff: YANG,PIN-CHENG Manager: TSENG,CHIA-HSIUNG In-charge accountant: CHEN,LING-CHU

Two. A company profile

I. Incorporation date: 25 September, 1973

Headquarter address: No. 4, Hsingkung Rd., Tashe Dist., Kaohsiung City Tel: (07)351-3911

Taipei office address: 10 F., No. 1, Sec. 4, Nanjing E. Rd., Songshan Dist., Taipei City

Tel: (02)8770-4567

II. Historical Highlights

2018 ZhangZhou Chi Mei Chemical, a joint venture with Chi Mei Corp., was established mainly to produce ABS. GPPC owns a 30.4% share of the joint venture.
2016 The 2[nd] Nylon 66 production line was added to meet the demand for engineering plastics and industrial filament application.
2014 Nylon 66 Products received UL High temperature RTI certificate.
2013 Audit Committee, replacing the supervisor’s function, is set up to strengthen corporate governance.
2012 Nylon Division was established in January and the production started in July.
ABS capacity expansion was completed, increasing the annual output. Subsidiary GPPC Chemical Corp. and BC Chemical Corp. were merged, with GPPC Chemical Corp. being the surviving company.
2011 Two seats of independent directors were added to strengthen corporate governance.
Compensation Committee was established.
2010 Utility plant was completed and started operation in May. Zhenjiang GPPC Chemical Co., Ltd. and Zhenjiang Chi Mei Co., were officially merged on July 1[st] .
2009 Grand Pacific Chemical (Thailand) Co., Ltd. was approved by Thailand's Ministry of Commerce to dissolve in August.
A successful trial run was conducted for steam production facilities in cogeneration plant in October.
2008 Germany SAP information system was successfully introduced. Subsidiary, Zhenjiang merger agreement was signed with Chi Mei company in April, while GPPC owned 30.4% shareholding of the surviving company.
Specialty Chemicals Business Division was set up in August.
2007 Promoting three-in-one ISO system integration with ISO 9001: 2000 and ISO 14001: 2004 certificates transferred to SGS Taiwan for certification. Zhenjiang GPPC Chemical Co., Ltd. expanded its SAN/ABS capacity.

A cogeneration plant started construction.

2006 BC Chemical transformed the original GPS production line into SAN. GPPC expanded its ABS capacity. Adding new grade of ABS product to meet customer’s needs.

2005 GPPC was awarded ASUS "Green Environment Management System" certificate.

2004 Delta Petrochemical's styrene monomer plant No. 1, being the first in Taiwan was dismantled. The plant’s thirty years service was culminated with a grand ceremony by GPPC acknowledging its long term contribution.

2003 GPPC was awarded SONY "Green Partner" certificate and OHSAS 18001 registration by SGS.

2002 Zhenjiang GPPC Chemical Co., Ltd. expanded its SAN/ABS capacity.

2001 GPPC was awarded ISO 9001:2000 registration by the Bureau of Standards, Metrology and Inspection, Ministry of Economic Affairs, R.O.C.

2000 BC Chemical expanded its HIPS capacity.

Zhenjiang GPPC Chemical Co., Ltd. expanded its SAN/ABS capacity. 1999 GPPC’s styrene monomer plant No. 3 was completed.

1997 GPPC was awarded both ISO 9002 and ISO 14001 certificates by the Bureau of Commodity Inspection and Quarantine, Ministry of Economic Affairs, R.O.C.

GPPC pursued a diversified investment strategy.

1996 GPPC subsidiary, Zhenjiang GPPC Chemical Co., Ltd., was founded in Jiangsu Province, China.

Grand Pacific Chemical (Thailand) Co., Ltd. expanded its ABS capacity. 1995 GPPC acquired Delta Gas Products, a high purity hydrogen producer. 1994 ABS/SAN capacity was expanded.

The production process for SM plant No. 2 was streamlined.

1992 ABS/SAN capacity was expanded.

GPPC invested in CITC Enterprise in Malaysia, a pre-colored plastic compounder.

1991 GPPC acquired BC Chemical, a high-impact and general purpose polystyrene producer.

GPPC invested in Grand Pacific Chemical (Thailand) Co., Ltd. and acquired a Thai ABS plant.

1990 GPPC acquired GPPC Chemical, a high-impact polystyrene (HIPS)

producer.

1988 GPPC was listed on the Taiwan Stock Exchange.

1987 ABS/SAN plant was expanded to increase capacity.

1984 Following a corporate reorganization, Delta Petrochemical became Grand

Pacific Petrochemical Corp.

The company's first ABS/SAN plant was completed. The plant marked the

first step in Grand Pacific's product diversification and vertical integration strategy.

1981 Delta Petrochemical's styrene monomer plant No. 2 was completed.

1974 Delta Petrochemical's styrene monomer plant No. 1, being the first in Taiwan, was completed and started production.
1973 Grand Pacific Petrochemical Corporation (GPPC) was founded under the name of Delta Petrochemical Corporation.

The most recent year and the end of the annual report

(I) Handling company mergers and acquisitions: None.

(II) The situation of reorganization of investment-relationship enterprises: None.

(III) The transfer of directors, supervisors or shareholders holding more than 10% of the shares of the majority of shares: replacement.

(IV) Significant changes in the management rights, business methods or business contents: None.

(V) Other important matters that affect shareholders' rights and their influence on the company: None.

Three. A corporate governance report.

I. Organizational system:

(I) Organization System Chart

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Shareholders’ Meeting
Board of Directors
Compensation Committee Audit Internal
Chairman
Committee Audit
Operation management committee
President
Special Task Force Total Quality Assurance
Management Committee
Senior Vice President
Senior Vice Senior Vice
President President
Kaohsiung Factory
Dept.
Utility Plant
Polymer Plant Maintenance Plant Plant Operation Monomer Plant Corporate R & D Purchasing Dept. Sales Dept.(SM) Accounting Dept. Finance Dept. President’s Office
Environment & Safety Sales Dept.(Polymer)
----- End of picture text -----

(II) The business of main department

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Department Responsibility
1. Management policy and business plan tracking and assessment matters
2. Plan and implement HR policies such as talent selection, talent usage, talent
cultivation and talent retention.
President’s Office
3. Human resources planning and implementation
4. Maintain a harmonious relationship between employees and the Company
5. External public relations and coordination of internal relations.
Internal Audit Responsible for audit matters
1. Planning and review of the annual budget.
2. Manage the Company’s production cost calculation, accounting processing and final
Accounting Dept.
accounting.
3. Provide managerial report
1. Responsible for purchasing bulk petrochemical raw materials and coal
2. Prescribing and implementing the marketing strategy of the Company’s
Sales Dept.(SM) petrochemical products, steam and electricity
3. Provide related industry information about petrochemical and assist investment plan
assessment
1. Prescribing, implementing, marketing and evaluating domestic and international
marketing strategies for plastic products (ABS/PS/nylon)
2. Manage the dealer’s setup, coordination and contact matters
Sales Dept.(Polymer)
3. Execute the Company’s sales of various products and the administration work of
bulk raw materials procurement.
4. Provide market information and cooperate with R&D to innovate new products.
1. Manage the procurement of chemicals and equipment at home and abroad.
2. Manage the contracting out of construction project and the signature of purchase
Purchasing Dept. agreement.
3. Manage chemical inventory control and procurement aspect.
4. Information system planning.
1. Mange corporate financial planning, asset management and capital utilization.
2. Mange corporate, shareholder service, and administrative service and relevant
Financial Dept. administration matters.
3. Manage corporate financial risk management and financial management investment
strategy
1. Focus on research and development of core products and technologies.
2. Improve the quality of core products and production processes
3. Quality improvement cases, technical improvement cases and general research cases
4. Successful mass production of industrial silk level nylon and development of special
nylon;
Corporate R&D
5. Towards theprincials of energy saving and carbon reduction, high value of products
and optimization of green manufacture process.
6. Improve manufacture process technology operations and follow and effectively
implement it.
7. Conduct assessments of various overseas investments.
Factory manager office Manage all relevant factory matters in Kaohsiung Plant.
According to the annual production target of styrene and hydrogen, the Company
Monomer Plant - -
achieves high quality and low cost production tasks.
According to the annual production goal of plastic products, the Company achieves
Polymer Plant - -
high quality and low cost production tasks.
1. Responsible for storage, transportation, human resources and general administration.
2. Serve as a communication bridge between employees in Kaohsiung factory and the
Plant Operation Dept.
Company.
3. Maintain a harmonious relationship between the Company and the labor union.
1. Repair and maintain equipment in whole plant.
2. Responsible for additional construction and reconstruction projects.
Maintenance Plant
3. Responsible for the power system in Kaohsiung plant.
4. Maintain and inspect the underground pipelines outside the plant.
1. Supervise the labor safety and health management of all departments to ensure a safe
and healthy working environment.
Environment & Safety
2. Responsible for wastewater treatment, air, noise and other pollution prevention, and
Dept.
comply with the law.
3. Responsible for assay and quality control operation.
1. Supply whole plant public use fluids, including steam, water, air, nitrogen, and
bottom oil.
Utility Plant.
2. Operate cogeneration plants to generate electricity.
3. Supply whole plant fire water system.
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II. Information on the company’s directors, president, senior vice president, vice president, and the supervisors of all the company’s divisions and branch units.

(I) Information on the Company’s directors

16 April, 2019

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Other manager, director or
Date on directors at the election Shares held by director currentlyShares held by spouses, children Shares held by director’s Shares held nomineesthrough Position(s) held within the second degree relative relationship supervisor with the
Nationality which The of minor age, and Principal work concurren of kinship.
Position or Name Gender current Term of commenceme experience and tly in the
registration position contract nt date of the academic Company
place was first term qualifications and/or in
assumed any other
company
Jing Guan Master of
Chairman(Note 1) Republic of China Investment Co., Ltd. Representative: Male 27 June, 2017 June 20202017 ~ 26 27 June, 24 June, 2011 [20,380,000] 0 2.25%0 20,280,0000 2.24%0 0 0 0 0 00 0 0 chemical engineering, National Cheng Note 2 None None None
YANG,PIN-C
HENG Kung University
Lai Fu
Ph.D. of
Investment
Chairman(Note 1) Republic of China Limited Representative: Male 27 June, 2017 June 20202017 ~ 26 27 June, 24 June, 2011 100,000241 0.01%0 100,000241 0.01%0 0 0 0 0 00 0 0 chemical engineering, University of applicableNot None None None
WU,CHUN-T Delaware
AI
27 June, Ph.D of finance,
Independent director Republic of China SHIH,KUANG-HSUN Male 27 June, 2017 June 20202017 ~ 26 15 June, 2012 0 0 0 0 0 0 0 0 Southeastern Nova Note 3 None None None
June University
Bachelor of law
27 June, 27 June, (legal system
Independent director Republic of China CHEN,SUNG-TUNG Male 2017 June 20202017 ~ 26 15 June, 2012 0 0 0 0 0 0 0 0 division), National Note 4 None None None
June Chengchi
University
Master of
business
27 June, management,
Independent director Republic of China CHEN,WEN-TSUNG Male 27 June, 2017 2017 ~ 26 25 June, 2014 0 0 0 0 0 0 0 0 Rider University Note. 5 None None None
June 2020 Master of law,
Soochow
University
Shares Shares Shares Shares Position Name
percentage Shareholding percentage Shareholding percentage Shareholding percentage Shareholding Relationship
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Director Republic of China Lai Fu Investment Limited Representative: TIEN,CHEN-C HING Male 27 June, 2017 27 June, 2017 ~ 26 June 2020 24 June, 2011 100,000 0 0.01% 0 100,000 0 0.01% 0 0 0 0 0 0 0 0 0 Bachelor of law, Fu Jen Catholic University Note 6 None None None	Director Republic of China Lai Fu Investment Limited Representative: TIEN,CHEN-C HING Male 27 June, 2017 27 June, 2017 ~ 26 June 2020 24 June, 2011 100,000 0 0.01% 0 100,000 0 0.01% 0 0 0 0 0 0 0 0 0 Bachelor of law, Fu Jen Catholic University Note 6 None None None	Director Republic of China Lai Fu Investment Limited Representative: TIEN,CHEN-C HING Male 27 June, 2017 27 June, 2017 ~ 26 June 2020 24 June, 2011 100,000 0 0.01% 0 100,000 0 0.01% 0 0 0 0 0 0 0 0 0 Bachelor of law, Fu Jen Catholic University Note 6 None None None	Director Republic of China Lai Fu Investment Limited Representative: TIEN,CHEN-C HING Male 27 June, 2017 27 June, 2017 ~ 26 June 2020 24 June, 2011 100,000 0 0.01% 0 100,000 0 0.01% 0 0 0 0 0 0 0 0 0 Bachelor of law, Fu Jen Catholic University Note 6 None None None	Director Republic of China Lai Fu Investment Limited Representative: TIEN,CHEN-C HING Male 27 June, 2017 27 June, 2017 ~ 26 June 2020 24 June, 2011 100,000 0 0.01% 0 100,000 0 0.01% 0 0 0 0 0 0 0 0 0 Bachelor of law, Fu Jen Catholic University Note 6 None None None	Director Republic of China Lai Fu Investment Limited Representative: TIEN,CHEN-C HING Male 27 June, 2017 27 June, 2017 ~ 26 June 2020 24 June, 2011 100,000 0 0.01% 0 100,000 0 0.01% 0 0 0 0 0 0 0 0 0 Bachelor of law, Fu Jen Catholic University Note 6 None None None	Director Republic of China Lai Fu Investment Limited Representative: TIEN,CHEN-C HING Male 27 June, 2017 27 June, 2017 ~ 26 June 2020 24 June, 2011 100,000 0 0.01% 0 100,000 0 0.01% 0 0 0 0 0 0 0 0 0 Bachelor of law, Fu Jen Catholic University Note 6 None None None	Director Republic of China Lai Fu Investment Limited Representative: TIEN,CHEN-C HING Male 27 June, 2017 27 June, 2017 ~ 26 June 2020 24 June, 2011 100,000 0 0.01% 0 100,000 0 0.01% 0 0 0 0 0 0 0 0 0 Bachelor of law, Fu Jen Catholic University Note 6 None None None	Director Republic of China Lai Fu Investment Limited Representative: TIEN,CHEN-C HING Male 27 June, 2017 27 June, 2017 ~ 26 June 2020 24 June, 2011 100,000 0 0.01% 0 100,000 0 0.01% 0 0 0 0 0 0 0 0 0 Bachelor of law, Fu Jen Catholic University Note 6 None None None	Director Republic of China Lai Fu Investment Limited Representative: TIEN,CHEN-C HING Male 27 June, 2017 27 June, 2017 ~ 26 June 2020 24 June, 2011 100,000 0 0.01% 0 100,000 0 0.01% 0 0 0 0 0 0 0 0 0 Bachelor of law, Fu Jen Catholic University Note 6 None None None	Director Republic of China Lai Fu Investment Limited Representative: TIEN,CHEN-C HING Male 27 June, 2017 27 June, 2017 ~ 26 June 2020 24 June, 2011 100,000 0 0.01% 0 100,000 0 0.01% 0 0 0 0 0 0 0 0 0 Bachelor of law, Fu Jen Catholic University Note 6 None None None	Director Republic of China Lai Fu Investment Limited Representative: TIEN,CHEN-C HING Male 27 June, 2017 27 June, 2017 ~ 26 June 2020 24 June, 2011 100,000 0 0.01% 0 100,000 0 0.01% 0 0 0 0 0 0 0 0 0 Bachelor of law, Fu Jen Catholic University Note 6 None None None	Director Republic of China Lai Fu Investment Limited Representative: TIEN,CHEN-C HING Male 27 June, 2017 27 June, 2017 ~ 26 June 2020 24 June, 2011 100,000 0 0.01% 0 100,000 0 0.01% 0 0 0 0 0 0 0 0 0 Bachelor of law, Fu Jen Catholic University Note 6 None None None	Director Republic of China Lai Fu Investment Limited Representative: TIEN,CHEN-C HING Male 27 June, 2017 27 June, 2017 ~ 26 June 2020 24 June, 2011 100,000 0 0.01% 0 100,000 0 0.01% 0 0 0 0 0 0 0 0 0 Bachelor of law, Fu Jen Catholic University Note 6 None None None	Director Republic of China Lai Fu Investment Limited Representative: TIEN,CHEN-C HING Male 27 June, 2017 27 June, 2017 ~ 26 June 2020 24 June, 2011 100,000 0 0.01% 0 100,000 0 0.01% 0 0 0 0 0 0 0 0 0 Bachelor of law, Fu Jen Catholic University Note 6 None None None	Director Republic of China Lai Fu Investment Limited Representative: TIEN,CHEN-C HING Male 27 June, 2017 27 June, 2017 ~ 26 June 2020 24 June, 2011 100,000 0 0.01% 0 100,000 0 0.01% 0 0 0 0 0 0 0 0 0 Bachelor of law, Fu Jen Catholic University Note 6 None None None	Director Republic of China Lai Fu Investment Limited Representative: TIEN,CHEN-C HING Male 27 June, 2017 27 June, 2017 ~ 26 June 2020 24 June, 2011 100,000 0 0.01% 0 100,000 0 0.01% 0 0 0 0 0 0 0 0 0 Bachelor of law, Fu Jen Catholic University Note 6 None None None	Director Republic of China Lai Fu Investment Limited Representative: TIEN,CHEN-C HING Male 27 June, 2017 27 June, 2017 ~ 26 June 2020 24 June, 2011 100,000 0 0.01% 0 100,000 0 0.01% 0 0 0 0 0 0 0 0 0 Bachelor of law, Fu Jen Catholic University Note 6 None None None	Director Republic of China Lai Fu Investment Limited Representative: TIEN,CHEN-C HING Male 27 June, 2017 27 June, 2017 ~ 26 June 2020 24 June, 2011 100,000 0 0.01% 0 100,000 0 0.01% 0 0 0 0 0 0 0 0 0 Bachelor of law, Fu Jen Catholic University Note 6 None None None	Director Republic of China Lai Fu Investment Limited Representative: TIEN,CHEN-C HING Male 27 June, 2017 27 June, 2017 ~ 26 June 2020 24 June, 2011 100,000 0 0.01% 0 100,000 0 0.01% 0 0 0 0 0 0 0 0 0 Bachelor of law, Fu Jen Catholic University Note 6 None None None
Director Republic of China Zhong Guan Investment Co., Ltd. Representative: HUANG,HSI- HUI Male 27 June, 2017 27 June, 2017 ~ 26 June 2020 27 June, 2005 28,262,722 0 3.12% 0 28,262,722 0 3.12% 0 0 0 0 0 0 0 0 0 Bachelor of accounting, Feng Chia University Note 7 None None None
Director (Note 1)	Republic of China	Lai Fu Investment Limited Representative: TSENG,CHIA- HSIUNG	Male	27 June, 2017	27 June, 2017 ~ 26 June 2020	24 June, 2011	100,000 0	0.01% 0	100,000 0	0.01% 0	0 0	0 0	0 0	0 0	Master of chemical engineering, National Taiwan University	None	None	None	None

Note 1: Mr. WU,CHUN-TAI resigned a chairman position on 14 April, 2018. The Company’s board of directors elected the representative of Jing Guan Investment Co., Ltd., Mr. YANG,PIN-CHENG as the Company’s chairman on 13 April, 2018 and on the same date the representative of Lai Wu Investment Limited changed to Mr. TSENG,CHIA-HSIUNG. Note 2: Chairman of GPPC CHEMICAL CORPORATION, director of British Virgin Islands Land and Sea Capital Corp., director of GPPC Investment Co., Ltd., director of Jin Ya (B.V.I) Investment limited, director of Videoland Television Network Co., Ltd., director of Zhenjiang Chimei Chemical Company Limited, and director of KK ENTERPRISE CO., LTD. Note 3: The principal of CTBC Business School, independent director of SENAO NETWORKS, INC., the independent director of Samebest Co., Ltd., independent directors of PLC Technologies Co., Ltd., director of Feng Sheng Investment Co., Ltd., supervisor of Lei Ba Business Co., Ltd., and supervisor of UNITED INFORMATION SYSTEM SERVICE CO., LTD..

Note 4: Attorney-at-law of Cheng Tai law firm, chairman of Shunlong kiln industry Co., Ltd., and the independent director of Hua NaanBank Co., Ltd.

Note 5: Director of TEST RITE INTERNATIONAL CO., LTD., independent director of ADVANCETEK ENTERPRISE CO., LTD, and independent director of HIYES INTERNATIONAL CO., LTD..

Note 6: The managing lawyer of T.Y.T. law office and supervisor of RALEC ELECTRONIC CORPORATION Note 7: The senior vice president of GRAND PACIFIC PETROCHEMICAL CORPORATION, chairman of GPPC Investment Co., Ltd., chairman of Jin Ya (B.V.I) Investment limited, chairman of GPPC Dining Corporation, director of British Virgin Islands Land and Sea Capital Corp. , director of Videoland Television Network Co., Ltd., assistant general managers of Videoland Television Network Co., Ltd., director of KK ENTERPRISE CO., LTD., and supervisor of GPPC CHEMICAL CORPORATION.

Note 8: Director of Zhangzhou Chimei Chemical Company Limited

Major shareholder of juristic person shareholder

16 April, 2019

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Name of juristic person (Note 1) Major shareholder of juristic person shareholder (Note 2) Shareholding percentage (%)
Lai Fu Investment Limited Pan Han Zhong 100.00
Jing Kwan Investment Co., Ltd. Yu Ming Investment Co., Ltd. 96.61
WU,CHUN-TAI 3.35
HUANG,YI-YING 0.03
Chung Kwan Investment Co., Ltd. Kuan He Development Co., Ltd. 99.03
LIN,JUI-HUI 0.25
Yan Wun Long 0.25
Yan Wen Ze 0.175
Yan Wen Xi 0.175
Cai Ming Ji 0.075
Zhang Xue E 0.05
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Note 1: If the director or supervisor is the representative of juristic person, the name of juristic person shareholder should be filled in. Note 2: Please list the name and its shareholding percentage of major shareholders (whose shareholding percentage should be the top ten) of such juristic person shareholder. If the major shareholder is juristic person, the table 2 should be filled in.

If the shareholder is juristic person, its major shareholders.

16 April, 2019

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Name of juristic person (Note 1) Major shareholders of juristic person (Note 2) Shareholding percentage (%)
Yu Ming Investment Co., Ltd. Wei Hong Investment Co., Ltd. 100.00
Kuan He Development Co., Ltd. LIN,JUI-HUI 25.01
Qin Li Investment Limited 24.93
Quan Wei Investment Co., Ltd. 24.93
Zhong Jun Investment Co., Ltd. 19.93
Zhong Cheng Investment Co., Ltd. 5.00
Yan Wun Long 0.09
Yan Wen Xi 0.03
Yan Wen Ze 0.03
Cai Ming Ji 0.03
Yan Wen Hui 0.03
Wu Ya Ru 0.00001
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Note 1: If the shareholder in table 1 is juristic person, please fill in the name of that juristic person. Note 2: Fill in the name of major shareholders (whose shareholding percentage should be the top ten) of such juristic person and its shareholding percentage.

16 April, 2019

Information on the Company’s directors (2)

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Condition Does he/she have working experience more than five years and have following professional Qualified the independence The number
qualification requirements requirement (Note 2) of
concurrent
An instructor or higher in a A judge, public prosecutor, attorney, Have work experience in
department of commerce, certified public accountant, or other the area of commerce, position as
the
law, finance, accounting, or professional or technical specialist who law, finance, or
other academic department has passed a national examination and accounting, or otherwise independent
1 2 3 4 5 5 7 8 9 10
related to the business needs been awarded a certificate in a necessary for the business director in
Name
of the Company in a public profession necessary for the business of the Company other public
or private junior college, of the Company. company.
(Note 1)
college, or university
Chairman: YANG,PIN-CHENG
(Note 3)
No No Yes   0
Representative of Jing Kwan
Investment Co., Ltd.
Chairman: WU,CHUN-TAI (Note 3)
Representative of Lai Fu Investment No No Yes  0
Limited
Independent director:
Yes No Yes  3
SHIH,KUANG-HSUN
Independent director:
No Yes Yes  1
CHEN,SUNG-TUNG
Independent director:
Yes Yes Yes  2
CHEN,WEN-TSUNG
Director: HUANG,HSI-HUI
Representative of Zhong Kwan No No Yes   0
Investment Co., Ltd.
Director: TIEN,CHEN-CHING
Representative of Lai Fu Investment No Yes Yes   0
Limited
Director: TSENG,CHIA-HSIUNG
(Note 3)
No No Yes  0
Representative of Lai Fu Investment
Limited
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Note 1: The column number will be adjusted by practical need.

Note 2: During the 2 years before being appointed or during the term of election, each director or supervisor is qualified any one of the following conditions, please check  in the column of each condition
（ 1 ） Not an employee of the company or any of its affiliates
（ 2 ） Not a director or supervisor of the company or any of its affiliates. The same does not apply, however, in cases where the person is an independent director of the company, its parent company, or any subsidiary, as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.
（ 3 ） Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under any other’s name, in an aggregate amount of 1 percent or more of the total number of issued shares of the company or ranking in the top 10 in shareholding
（ 4 ） Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons in the preceding three subparagraphs.
（ 5 ） Not a director, supervisor, or employee of a corporate shareholder that directly holds 5 percent or more of the total number of issued shares of the company or ranks in the top 5 in shareholding.
（ 6 ） Not a director, supervisor, managerial officer, or shareholder holding 5 percent or more of the shares, of a specified company or institution that has a financial or business relationship with the company.
（ 7 ） Not a professional individual who, or an owner, partner, director, supervisor, or managerial officer of a sole proprietorship, partnership, company, or institution that, provides commercial, legal, financial, or accounting services or consultation to the company or to any affiliate of the company, or a spouse thereof However, that this restriction does not apply to remuneration committee members performing their official powers under Article 7 of Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Stock Exchange or Traded Over the Counter.
（ 8 ） There is no spousal relationship or a familial relationship within the second degree of kinship with other directors.
（ 9 ） There is no circumstance in the subparagraphs of Article 30 of the Company Act.
（ 10 ） There is not elected in the capacity of the government, a juristic person, or a representative thereof, as provided in Article 27 of the Company Act.
Note 3: Mr. WU,CHUN-TAI resigned from chairman on 14 April, 2018. The Company’s board of directors elected the representative of Jing Kwan Investment Co., Ltd., Mr. YANG,PIN-CHENG, as chairman on 13 April, 2018. In the same date, Lai Fu Investment Limited changes its representative to Mr. TSENG,CHIA-HSIUNG.

(II) Information on the company’s president,senior vice president, vice president, and the supervisors of all the company’s divisions and branch units.

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16 April, 2019
The manager with spousal
relationship or a familial
Shares held by Shares held through
Share relationship within the second
spouse and minors nominees
Election (on Principal work experience Concurrently serves in other degree of kinship.
Position Nationality Name Gender board) and academic position of the Company
date qualifications
Shares
Shares Shares
Shares Percentage Shares Position Name Relationship
Percentage. [Shares] Percentage.
.
1. Chairman of GPPC CHEMICAL
CORPORATION
2. Director of British Virgin Islands
Land and Sea Capital Corp.
3. Director of Jin Ya (B.V.I)
Investment limited
Master of chemical
Republic of YANG,PIN 4. The director of GPPC Investment
Chairman Male 15 April, 2018 0 0 0 0 0 0 engineering, National None None None
China -CHENG Co., Ltd.
Cheng Kung University
5. Director of Videoland Television
Network Co., Ltd.
6. Director of Zhenjiang Chimei
Chemical Company Limited
7. Director of KK ENTERPRISE
CO., LTD.
From 30 July, Ph.D. of chemical
Chairman(Retired) Republic of China WU,CHUN-TAI Male 2012 to 14 241 0 0 0 0 0 engineering, University of Not applicable. None None None
April, 2018 Delaware
1. Director of GPPC CHEMICAL
presidentActing Republic of China TSENG,CHIA-HSIUNG Male 11 May, 2018 0 0 0 0 0 0 Master of chemical engineering, National Taiwan University CORPORATION 2. Director of Zhangjiang Chimei None None None
Chemical Company Limited
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The manager with spousal
relationship or a familial
Shares held by Shares held through
Share relationship within the second
spouse and minors nominees
Election (on Principal work experience Concurrently serves in other degree of kinship.
Position Nationality Name Gender board) and academic position of the Company
date qualifications
Shares
Shares Shares
Shares Percentage Shares Position Name Relationship
Percentage. [Shares] Percentage.
.
1. Chairman of GPPC Investment
Co., Ltd.
2. The chairman of GPPC
Investment Co., Ltd.
3. Chairman of Jin Ya (B.V.I)
Investment limited
4. Chairman of GPPC Dining
Corporation
5. Director of British Virgin Islands
Senior vice Republic of HUANG,H Bachelor of accounting,
Male 16 April, 2003 0 0 0 0 0 0 Land and Sea Capital Corp. None None None
president China SI-HUI Feng Chia University
6. Director of KK ENTERPRISE
CO., LTD.
7. Director of Videoland Television
Network Co., Ltd.
8. Supervisor of GPPC CHEMICAL
CORPORATION
9. Assistant general managers of
Videoland Television Network Co.,
Ltd.
1. Director of Guo Heng Investment
Limited.
Master of chemical
Senior vice president Republic of China CHOU,CHEN-MING Male 1 March, 2011 0 0 0 0 0 0 engineering, National 2. Director of Zhenjiang Chimei Chemical Company Limited None None None
Taiwan University
3. Director of Jin Ya (B.V.I)
Investment limited
Master of Mechanical and
1. Director of GPPC CHEMICAL
Automation Engineering,
managerFactory Republic of China LIANG,JEN-CHIEH Male 1 March, 2011 0 0 0 0 0 0 National Kaohsiung CORPORATION 2. General Manager of GPPC None None None
University of Science and
CHEMICAL CORPORATION
Technology,
Master of chemical
Vice Republic of Taso Fu Male 1 February, 0 0 0 0 0 0 engineering, Tamkang None None None None
presiden China Hua 2017. University
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The manager with spousal
relationship or a familial
Shares held by Shares held through
Share relationship within the second
spouse and minors nominees
Election (on Principal work experience Concurrently serves in other degree of kinship.
Position Nationality Name Gender board) and academic position of the Company
date qualifications
Shares
Shares Shares
Shares Percentage Shares Position Name Relationship
Percentage. [Shares] Percentage.
.
Master of Environment,
Safety, and Health
Vice Republic of LIN,WEN- Male 1 February, 0 0 0 0 0 0 Engineering, National Director of Zhangjiang Chimei None None None
presiden China HUI 2019 Kaohsiung University of Chemical Company Limited
Science and Technology,
1. Supervisor of GPPC Investment
Co., Ltd.
2. Director of Videoland Television
Vice Republic of CHEN,CHI Male 1 February, 0 0 0 0 0 0 Master of Accounting, Network Co., Ltd. None None None
presiden China NG-FU 2019 Soochow University 3. Supervisor of GPPC Dining
Corporation
4. Supervisor of Zhangjiang Chimei
Chemical Company Limited
From 1 August, Bachelor of Chemical
Director (retired) Republic of China Wei Shi Xin Male 2012 to 37 0 0 0 0 0 0 Engineering, Tunghai None None None None
March, 2019 University
Bachelor of business
Director Republic of China Wu Zhi Rong Male 1 July, 2013 90,000 0 0 0 0 0 document, Tamsui Institute None None None None
of Business Administration
Master of Environmental
Director Republic ofChina Xue Hong Min Male 1 July, 2017 0 0 0 0 0 0 Engineering, National None None None None
Cheng Kung University
Master of chemical
Director Republic of China Zhang Cong Ming Male 11 May, 2018 0 0 0 0 0 0 engineering, National None None None None
Cheng Kung University
Master of Logistics
Director Republic of China LI,AN-TENG Male 28 March, 2005 0 0 0 0 0 0 Management, Kaohsiung University of National None None None None
Science and Technology
Bachelor of Business,
Director Republic ofChina CHEN,LING-CHU Female 1 January, 2009 0 0 0 0 0 0 Accounting Major, Director of GPPC Dining Corporation None None None
Providence University
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Position Nationality Name Gender Election (on board) date	Position Nationality Name Gender Election (on board) date	Position Nationality Name Gender Election (on board) date	Position Nationality Name Gender Election (on board) date	Position Nationality Name Gender Election (on board) date	Share Shares held by spouse and minors Shares held through nominees Principal work experience and academic qualifications Concurrently serves in other position of the Company Shares Shares Percentage . Shares Shares Percentage.Shares Shares Percentage.	Share Shares held by spouse and minors Shares held through nominees Principal work experience and academic qualifications Concurrently serves in other position of the Company Shares Shares Percentage . Shares Shares Percentage.Shares Shares Percentage.	Share Shares held by spouse and minors Shares held through nominees Principal work experience and academic qualifications Concurrently serves in other position of the Company Shares Shares Percentage . Shares Shares Percentage.Shares Shares Percentage.	Share Shares held by spouse and minors Shares held through nominees Principal work experience and academic qualifications Concurrently serves in other position of the Company Shares Shares Percentage . Shares Shares Percentage.Shares Shares Percentage.	Share Shares held by spouse and minors Shares held through nominees Principal work experience and academic qualifications Concurrently serves in other position of the Company Shares Shares Percentage . Shares Shares Percentage.Shares Shares Percentage.	Share Shares held by spouse and minors Shares held through nominees Principal work experience and academic qualifications Concurrently serves in other position of the Company Shares Shares Percentage . Shares Shares Percentage.Shares Shares Percentage.	Share Shares held by spouse and minors Shares held through nominees Principal work experience and academic qualifications Concurrently serves in other position of the Company Shares Shares Percentage . Shares Shares Percentage.Shares Shares Percentage.	Share Shares held by spouse and minors Shares held through nominees Principal work experience and academic qualifications Concurrently serves in other position of the Company Shares Shares Percentage . Shares Shares Percentage.Shares Shares Percentage.	The manager with spousal relationship or a familial relationship within the second degree of kinship.	The manager with spousal relationship or a familial relationship within the second degree of kinship.	The manager with spousal relationship or a familial relationship within the second degree of kinship.
													Position Name Relationship
Director Republic of China LIN,CHUA N-YI Male 20 February, 2016					60,000 0 0 0 0 0 Bachelor of Shipbuilding and voyage machinery, National Cheng Kung University None								None None None
Director	Republic of China	HUANG,C HIH-HAN	Male	11 May, 2018	2,000	0	0	0	0	0	Master of Material Technology and Engineering, I-Shou University	None	None	None	None

III. Remuneration paid during the most recent fiscal year to directors, the general manager, and assistant general managers

(1-1) Remuneration paid to directors (including independent directors) (the method of individual disclosures of each name and remuneration):

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Does he/she
Remuneration paid to directors Concurrent employee’s remuneration
received any
The percentage of remuneration
The percentage of total aggregated form the
total aggregated amount of seven Company’s
Director’s Business execution amount of A, B, C, Compensation, item, A, B, C, D, invested
Remuneration (A) Pension (B) remuneration expenses (D) (Note and D to profit after bonus and special Pension (F) Employee’s remuneration (G) E,F, and G, to entity except
(Note 2) tax (Note 10) expenses (E) (Note (Note 6)
(C)(Note 3) 4) profit after tax the
5)
Position Name (Note 10) Company’s
subsidiaries?
(Note 11)
All All All All All All All All companies All
companies companies companies companies companies companies companies in the financial companies
The Company
The in the The in the The in the The in the The in the The in the The in the statements The in the
Company financial Company financial Company financial Company financial Company financial Company financial Company financial (Note 7) Company financial
statements statements statements statements statements statements statements Cash Stock Cash Stock statements
(Note 7) (Note 7) (Note 7) (Note 7) (Note 7) (Note 7) (Note 7) amount amount amount amount (Note 7)
Jing Kwan Investment
Co., Ltd.
Chairman (From 15 April, 2018) 3,720,000 3,854,000 1,008,000 1,008,000 0 0 700,647 756,647 0.1834% 0.1898% 0 0 0 0 0 0 0 0 0.1834% 0.1898% 0
Representative:
YANG,PIN-CHENG
Lai Fu Investment
Limited
Chairman (Form 14, April, 2018) 9,862,302 9,862,302 6,672,000 6,672,000 0 0 129,984 129,984 0.5630% 0.5630% 0 0 0 0 0 0 0 0 0.5630% 0.5630% 0
Representative:
WU,CHUN-TAI
Jing Kwan Investment
Co., Ltd.
Director (~ 14 April, 2018) 0 0 0 0 0 0 0 0 0.0000% 0.0000% 7,145,785 7,213,785 508,576 508,576 146,358 0 146,358 0 0.2635% 0.2658% 0
Representative:
YANG,PIN-CHENG
Lai Fu Investment
Limited
Director (From 15 April, 2018) 0 0 0 0 0 0 0 0 0.0000% 0.0000% 2,252,425 2,276,425 446,988 446,988 349,606 0 349,606 0 0.1030% 0.1038% 0
Representative:
TSENG,CHIA-HSIUNG
Zhong Kwan Investment
Co., Ltd.
Director 0 0 0 0 0 0 0 0 0.0000% 0.0000% 5,001,952 7,526,052 479,718 515,766 250,812 0 408,036 0 0.1937% 0.2855% 120,000
Representative:
HUANG,HSI-HUI
Lai Fu Investment
Director Limited 20,000 20,000 0 0 0 0 120,000 120,000 0.0047% 0.0047% 0 0 0 0 0 0 0 0 0.0047% 0.0047% 0
Representative:
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TIEN,CHEN-CHING
Director Zhong Kwan Investment Co.,Ltd.	0	0	0	0	14,991,16215,234,459	0	0	0.5064%	0.5147%	0	0	0	0	0	0	0	0	0.5064%	0.5147%	0
Director Lai Fu Investment Limited	0	0	0	0	34,253,77934,253,779	0	0	1.1572%	1.1572%	0	0	0	0	0	0	0	0	1.1572%	1.1572%	0
Director Jing Kwan Investment Co.,Ltd.	0	0	0	0	25,710,87025,710,870	0	0	0.8686%	0.8686%	0	0	0	0	0	0	0	0	0.8686%	0.8686%	0
* Except those disclosed in the above table, the service compensation from all companies in the financial statements (such as consultant, not employee) in last fiscal year: None.

(1-2) The remuneration of director (including independent director) (aggregate remuneration information, with the name(s) indicated for each remuneration range):

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Remuneration paid to directors The percentage of total Concurrent employee’s remuneration The percentage of total Does he/she
aggregated amount of aggregated amount of
A, B, C, and D to received any
Remuneration (A) Director’s Business execution profit after tax (Note Compensation, bonus Employee’s remuneration (G) (Note seven item, A, B, C, D, remuneration
(Note 2) Pension (B) remuneration (C)(Note 3) expenses (D) (Note 4) 10) and special expenses (E) (Note 5) Pension (F) 6) E,F, and G, to profit after tax (Note 10) form the
Position Name All All All All All All All All companies in All Company’s
invested entity
companies companies companies companies companies companies companies The Company the financial companies
except the
The in the The in the The in the The in the The in the The in the The in the statements (Note 7) The in the
Company’s
Company financial Company financial Company financial Company financial Company financial Company financial Company financial Company financial
Cash Stock Cash Stock subsidiaries?
statements statements statements statements statements statements statements statements
amount amount amount amount (Note 11)
(Note 7) (Note 7) (Note 7) (Note 7) (Note 7) (Note 7) (Note 7) (Note 7)
Independent
director SHIH,KUANG-HSUN
Independent director CHEN,SUNG-TUNG 4,260,000 4,260,000 0 0 0 0 564,000 564,000 0.1630% 0.1630% 0 0 0 0 0 0 0 0 0.1630% 0.1630% 0
Independent
director CHEN,WEN-TSUNG
Except those disclosed in the above table, the service compensation from all companies in the financial statements (such as consultant, not employee) in last fiscal year: None.
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Remuneration range table

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Name of director
The aggregation amount of the
The aggregation amount of the four items seven items
The remuneration range of (A+B+C+D)
(A+B+C+D+E+F+G)
payment o each director
All companies in All reinvested
The Company The Company
the financial enterprise.
(Note 8) (Note 8)
statements (Note 9) (Note 9)
Tian Zhen Qing, Tian Zhen Qing,
TSENG,CHIA-HSIUNG TSENG,CHIA-HSIUNG
SHIH,KUANG-H SHIH,KUANG-HSU
, HUANG,HSI-HUI, , HUANG,HSI-HUI,
SUN, N,
TIEN,CHEN-CHING, TIEN,CHEN-CHING,
Below NT$2,000,000 CHEN,SUNG-TU CHEN,SUNG-TUN
SHIH,KUANG-HSUN, SHIH,KUANG-HSUN,
NG, G,
CHEN,SUNG-TUNG, CHEN,SUNG-TUNG,
CHEN,WEN-TSU CHEN,WEN-TSUN
CHEN,WEN-TSUNG CHEN,WEN-TSUNG
NG G
NT$ 2,000,000 (included) to TSENG,CHIA-HS TSENG,CHIA-HSIU
IUNG NG
NT$ 5,000,000 (not included)
NT$ 5,000,000 (included) to
YANG,PIN-CHENG YANG,PIN-CHENG HUANG,HSI-HUI HUANG,HSI-HUI
NT$ 10,000,000 (not included)
YANG,PIN-CHE
NT$10,000,000 (include) to Zhong Kwan Investment NG, Zhong Kwan
YANG,PIN-CHENG
Co., Ltd. Investment Co.,
NT$10,000,000 (not included) Ltd.
WU,CHUN-TAI,
Wu Chun Tai, Zhong WU,CHUN-TAI,
WU,CHUN-TAI, Jing Zhong Kwan
NT$ 15,000,000 (included) to Kwan Investment Co., Jing Kwan
Kwan Investment Co., Investment Co., Ltd.,
NT$30,000,000 (not included) Ltd., Jing Kwan Investment Co.,
Ltd. Jing Kwan Investment
Investment Co., Ltd. Ltd.
Co., Ltd.
NT$ 30,000,000 (included) to Lai Fu Investment Lai Fu Investment Lai Fu Investment Lai Fu Investment
Limited Limited Limited Limited
NT$50,000,000 (not included)
NT$ 50,000,000 (included) to
NT$100,000,000 (not included)
More than NT$100,000,000
Total 11 11 11 11
----- End of picture text -----

Note 1: Director’s name should be listed separately (juristic person shareholder should separate list its name and legal representative) and disclose remuneration information of each item for each remuneration range If one is concurrently served as director and general manager or assistant general manager, this table (3-1) and below table (3-2) should be filled.
Note 2: It means the director remuneration (including director compensation, position allowance, severance pay, relevant bonus and reward) of last fiscal year.
Note 3: It should be filled in the remuneration amount passed by the latest board of directors.
Note 4: It means relevant business execution expenses (including travelling expenses, special expenses, relevant allowance, other physical supply such as accommodation and car, etc.) paid to directors in the last fiscal year. If provide house, car or other transportation vehicle or personal use payment, it should have disclosed the nature of the equity, cost, actual rental or rental at fair market value, oil expenses and other supply. If there is supplied with driver, it should explain in the note the relevant compensation of the driver.
Note 5: It means all compensation, position allowance, severance pay, relevant bonus, rewards, travelling expenses, special expenses, relevant allowance and other physical supply such as accommodation and car, etc. one who concurrently served as director and employee (including general manager, assistant general manager, other manager s and employee) received in the latest fiscal year. If provide house, car or other transportation vehicle or personal use payment, it should have disclosed

the nature of the equity, cost, actual rental or rental at fair market value, oil expenses and other supply. If there is supplied with driver, it should explain in the note the relevant compensation of the driver. Besides, employee share subscription warrants, new restricted employee shares and capital increase subscription, etc. should be recognized as salary expenses in according to IFRS 2 “dividends basis payment.”

Note 6: It means the employee remuneration (including stock and cash) one who concurrently served as director and employee (including general manager, assistant general manager, other manager s and employee) received in the latest fiscal year. It should disclose the employee remuneration passed by the board of directors of the latest year. If the number cannot be estimated, then calculates the proposed number of this year based on the actual distribution number of latest year and fills in table 1-3.
Note 7: It should disclose the aggregated payment to the Company’s directors from all companies (including the Company) in the consolidated financial statements.
Note 8: The aggregated number of the Company payment to each director. It should be disclosed the director name in each range.
Note 9: The aggregated number of all companies in the financial statements (including the Company) payment to each Company’s director. It should be disclosed the director name in each range.
Note 10: Profit after tax means the profit after tax of the latest fiscal year. If adopted International Financial Reporting Standards, the profit after tax means the profit after tax of each or individual financial statements.
Note 11: a. This column should clearly list relevant payment to the Company directors from reinvested entities except subsidiaries.
b. If the directors receives any payment from reinvested entities except subsidiaries, it should incorporate the payment from reinvested entities except subsidiaries into the column I of remuneration ranger table and change the column name as “all reinvested entities.”
c. Remuneration means salary, compensation (including employee, director, or supervisor compensation), business execution expenses and relevant money received by the Company’s directors received as the director, supervisor, manager a received of the reinvested entity.
The remuneration information in this table is different the income concept in the income tax act. Therefore, the purpose of this table is for information disclosure and not for tax purpose.
(2-1) Remuneration of supervisor (individual disclosure name and remuneration): Not applicable.
(2-2) Remuneration of supervisor (aggregate remuneration information, with the name(s) indicated for each remuneration range): Not applicable
(3-1) Remuneration of general manager and assistant general manager (individual disclosure name and remuneration): Not applicable

(3-2) Remuneration of general manager and assistant general manager (aggregate remuneration information, with the name(s) indicated for each remuneration range)

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The percentage
of total
Bonus and
Compensation Employee remuneration aggregated
Special expenses,
(A) Pension (B) (D) amount of A, B,
etc. (C)
(Note 2) (Note 4) C, and D to
(Note 3)
profit after tax
(Note 10)
All companies
Position Name
in the
The
financial
Company
statements
(Note 5)
President
YANG,PIN
(~ 10 May,
-CHENG
2018)
TSENG,C
Acting
HIA-HSIU
president
NG
Senior 7,647,033 9,591,433 2,195,029 2,231,077 15,789,335 16,485,035 1,094,741 0 1,251,965 0 0.9029% 0.9986% 120,000
HUANG,H
vice
SI-HUI
president
Senior
CHOU,CH
vice
EN-MING
president
(Note 5) (Note 5) (Note 5) (Note 5)
Company’s subsidiaries? (Note 9)
The Company financial statements All companies in the The Company financial statements All companies in the The Company financial statements All companies in the Amount Cash Amount Stock Amount Cash Amount Stock The Company financial statements All companies in the the Company’s invested entity except the
Does he/she received any remuneration form
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＊ All position equal to general manager, assistant general manager (such as: president, chief executive office, supervisor, etc.) t should be disclosed, no matter is position name.

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Remuneration range table
Remuneration range of he payment to Name of general managers and assistant general managers
each of the Company’s general
All reinvested businesses (Note
manager and assistant general The Company
7)
manager
Below NT$2,000,000
NT$ 2,000,000 (included) to NT$
5,000,000 (not included)
YANG,PIN-CHENG, YANG,PIN-CHENG,
NT$ 5,000,000 (included) to NT$ TSENG,CHIA-HSIUNG, TSENG,CHIA-HSIUNG,
10,000,000 (not included) HUANG,HSI-HUI, HUANG,HSI-HUI,
CHOU,CHEN-MING CHOU,CHEN-MING
NT$10,000,000 (include) to
NT$10,000,000 (not included)
NT$ 15,000,000 (included) to
NT$30,000,000 (not included)
NT$ 30,000,000 (included) to
NT$50,000,000 (not included)
NT$ 50,000,000 (included) to
NT$100,000,000 (not included)
More than NT$100,000,000
Total 4 4
----- End of picture text -----

Note 1: The name of general manager and assistant general manager should be listed separately and disclose remuneration information of each item for each remuneration range. If one is concurrently served as director and general manager or assistant general manager, this table (1-1) and below table(1-2) should be filled.
Note 2: It should fill in the compensation, position allowance, severance pay to general manager and assistant of the latest fiscal year.
Note 3: It should fill the amount of relevant bonus, rewards, travelling expenses, special expenses, relevant allowance, physical supply and other rewards such as accommodation and car, etc. paid to general manager and assistant general manager received in the latest fiscal year. If provide house, car or other transportation vehicle or personal use payment, it should have disclosed the nature of the equity, cost, actual rental or rental at fair market value, oil expenses and other supply. If there is supplied with driver, it should explain in the note the relevant compensation of the driver. Besides, employee share subscription warrants, new restricted employee shares and capital increase subscription, etc. should be recognized as salary expenses in according to IFRS 2 “dividends basis payment.”
Note 4: It should fill in the employee remuneration (including stock and cash) of general manager and assistant general manager received In the latest fiscal year. If the number cannot be estimated, then calculates the proposed number of this year based on the actual distribution number of latest year and fills in table 1-3. Note 10. Profit after tax means the profit after tax of the latest fiscal year. If adopted International Financial Reporting Standards, the profit after tax means the profit after tax of each or individual financial statements.
Note 5: It should disclose the aggregated payment to the general manager and assistant general manager from all companies (including the Company) in the consolidated financial statements.
Note 6: The aggregated number of the Company payment to each general manager and assistant general manager. It should be disclosed the name of general manager and assistant general manager in each range.
Note 7: The aggregated number of all companies in the financial statements (including the Company) payment to each Company’s general manager and assistant general manager. It should be disclosed the name of general manager and assistant general manager in each range.
Note 8: Profit after tax means the profit after tax of the latest fiscal year. If adopted International Financial Reporting Standards, the profit after tax means the profit after tax of each or individual financial statements.
Note 9: a. This column should clearly list relevant payment to the Company’s general manager and assistant general manager from reinvested entities except subsidiaries.
b. If the general manager and assistant general manager receives any payment from reinvested entities

except subsidiaries, it should incorporate the payment from reinvested entities except subsidiaries into the column E of remuneration ranger table and change the column name as “all reinvested entities.”

c. Remuneration means salary, compensation (including employee, director, or supervisor compensation), business execution expenses and relevant money received by the Company’s general manager and assistant general manager received as the director, supervisor, manager a received of the reinvested entity.
The remuneration information in this table is different the income concept in the income tax act. Therefore, the purpose of this table is for information disclosure and not for tax purpose.

(I) The name and distribution status of manager’s employee remuneration

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16 April, 2019
Total to
Position Name Stock Cash
Total profit after
(Note 1) (Note 1) amount amount
tax (%)
YANG,PIN-CHENG
President
~
( 10 May, 2018)
Acting president TSENG,CHIA-HSIUNG
Senior vice president HUANG,HSI-HUI
Senior vice president CHOU,CHEN-MING
General manager LIANG,JEN-CHIEH
0 2,354,156 2,354,156 6.2815%
Vice president TSAO, FU HUA
Vice president LIN,WEN-HUI
Vice president of financial
CHEN,CHING-FU
department
Director of accounting
CHEN,LING-CHU
department
Managers
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Note 1: The name and position should be individually disclosed. However, aggregation profit distribution could be disclosed in the method of remuneration range.

Note 2: It should fill in the employee remuneration (including stock and cash) of manage received. In the latest fiscal year. If the number cannot be estimated, then calculates the proposed number of this year based on the actual distribution number of latest year. Profit after tax means the profit after tax of the latest fiscal year. If adopted International Financial Reporting Standards, the profit after tax means the profit after tax of each or individual financial statements.

Note 3: The application scope of manager, please refer to the letter of Tai Cai Zheng No. 0920001301. The scope is as below:

(1) general managers and their equivalents
(2) Assistant general managers and their equivalents
(3) deputy assistant general managers and their equivalents
(4) Chief of financial department
(5) Chief of accounting department
(6) Other persons authorized to manage affairs and sign documents on behalf of the Company
Note 4: If directors, general managers and assistant general managers received employee remuneration (including stock and cash), please fill in table 1-2 and this table.

(II) Separately compare and describe total remuneration, as a percentage of net income stated in financial statements, as paid by this Company and by each other company included in the consolidated financial statements during the past 2 fiscal years to directors, supervisors, general managers, and assistant general managers, and analyze and describe remuneration policies, standards, and packages, the procedure for determining remuneration, and its linkage to operating performance and future risk exposure:
The analysis of the 2 most recent fiscal years

	2017 remuneration to profit after tax	2017 remuneration to profit after tax	2018 remuneration to profit after tax	2018 remuneration to profit after tax
Position	The Company	All companies in the financial statements	The Company	All companies in the financial statements	Brief
Directors	3.25%	3.35%	4.01%	4.12%	The Company directors,
Supervisor	Not applicable	Not applicable	Not applicable	Not applicable	supervisors, and employee’s
President and Senior vice president	0.72%	0.81%	0.90%	1.00%	remuneration of earning distribution is in compliance with the Company’s article of incorporation.

Remuneration policies, standards, and packages, the procedure for determining remuneration,

and its linkage to operating performance and future risk exposure:

To cost down, the manager concurrently served as director does not apply for travelling expenses. The remuneration of directors and supervisors complies with Article 27 of the Company’s article of incorporation and no matter the Company has profit or not, the Company should pay remuneration. The remuneration is decided by remuneration committee in accordance with common standard in the industry and submits to board of director to resolve it. The remuneration of general manager and assistant general manager is also decided by remuneration committee in according to personal performance, contribution to Company’s overall operation., and common standard in the industry and submits to board of directors to decide. It is not directly affected by future risk.

IV. Company governance:

(I) The operation of board of director

In the lasts year, 2018, there are 7 meetings of board of directors and the attendance of directors is as below:

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Actual The time to
Actual attendance
Position Name attendance times attendance Note
rate (B/A)
(B) by proxy
Representative of a juristic person
director: the board of directors
reelected on 13 April, 2018 and the
Chairman YANG,PIN-C 7 0 100 director assumed office on 15 Apil, 2018.
HENG
Name of representative of a juristic
person director: Jing Kwan
Investment Co., Ltd.
Renewal on 27 June, 2017
Representative of a juristic person
director: the board of directors
reelected on 13 April, 2018 and the
WU,CHUN-T director retired on 14 Apil, 2018
Chairman 1 1 33
AI Name of representative of a juristic
person director: Lai Fu Investment
Limited, assumed office on 27 June,
2017.
Independent SHIH,KUAN
7 0 100 Renewal on 27 June, 2017
director G-HSUN
Independent CHEN,SUNG-
7 0 100 Renewal on 27 June, 2017
director TUNG
Independent CHEN,WEN-
7 0 100 Renewal on 27 June, 2017
director TSUNG
Representative of a juristic person
TIEN,CHEN- director:
Director 5 2 71 Name of representative of a juristic
CHING
person director: Lai Fu Investment
Limited, succeed on 27 June, 2017
Representative of a juristic person
director: the board of directors
reelected on 13 April, 2018 and the
Director TSENG,CHIA 4 0 100 director assumed office on 15 Apil, 2018.
-HSIUNG
Name of representative of a juristic
person director: Lai Fu Investment
Limited, renew its term on 27 June,
2017.
Representative of a juristic person
director:
HUANG,HSI- Name of representative of a juristic
Director 7 0 100
HUI person director: Zhong Kwan
Investment Co., Ltd.
Renewal on 27 June, 2017
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Any other matters that require reporting:

I. In any one of following circumstances occurred in the meeting of board of directors, the date, term, content of the item, opinion of all independent directors and the Company’s response to independent directors’ opinion should be recorded:

(I) The items listed in Article 14-3 of Securities and Exchange Law: None.
(II) Except above, others resolutions of board of directors with recordation or written attestation that independent director objected to or expressed reservations: None.
II. As for the implementation of the recusal of director due to conflict of interest, it should
record the name of directors, the content of the item, the reason of recusal of director due to conflict of interest and the resolution result:
(I) The discussion matter (I) of the 8th meeting of 12th board of directors dated on 9 August, 2018. The 2017 remuneration proposal of director and manager. Chairman YANG,PIN-CHENG, TSENG,CHIA-HSIUNG, concurrent serves as director and acting president; and Mr. HUANG,HSI-HUI, concurrent serves as director and senior vice president. Because this proposal is related to the remuneration of director and manager and the directors has conflict of interest, the directors are refused to discuss and vote and other directors attended the meeting resolved the proposal.
(II) Except the above proposal, there is no other proposal which the directors have conflict of interest.
III. Evaluation of targets for strengthening of the functions of the board (such as establishment
of audit committee and improve the information transparency, etc.) during the current and immediately preceding fiscal years, and measures taken toward achievement thereof; and
Director’s training: The Company regular arranges external training to directors.
Improve the information transparency: The Company stick on transparent operation and pay

attention to shareholder’s interest. Every time after the board of directors, the Company announces important resolution revolved by board of directors.

Note 1: If the directors or supervisors are juristic persons, it should disclose the name of the juristic person and the name of its representative.
Note 2: (1) If the director or supervisor resigned before the end of the year, the resignation date should be disclosed in the note column. The actual attendance rate should be calculated on the basis of meeting times of board of directors which he/she served as a director/supervisor.
(2) If there is reelection of director/supervisor before the end of the year, the new and original directors and supervisors should be listed and noted in the note column whether the director/supervisor is original, new or renewed and the reelection date. The actual attendance rate should be calculated on the basis of meeting times of board of directors which he/she served as a director/supervisor.

(II) The implementation of audit committee

The audit committees have six (A) meetings in the latest fiscal year. The attendance of independent directors is as below:

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Actual The time to Actual attendance
Position Name attendance attendance by rate (%) Note
times (B) proxy (B/A) (Note)
CHEN,WE
Convener 6 0 100
N-TSUNG
Independent SHIH,KUA
6 0 100
director NG-HSUN
Independent CHEN,SU
6 0 100
director NG-TUNG
Any other matters that require reporting:
I. In any one of following circumstances occurred in operation of audit committee, the date of the meeting of board
of directors, term, content of the item, the resolution of audit committee and the Company’s response to such
resolution should be recorded:
(I) The items listed in Article 14-5 of Securities and Exchange Law: None.
(II) Except above, others resolutions which is not resolved by audit committee but resolved by two thirds of
board of directors: None
Securities
and is not resolved by
Exchange audit committee but
Board of directo The content of the proposal and its follow up handling. Law is resolved by two
14-5 thirds of the board
the listed of directors
item
The 12 [th] 1. It is resolved to invest NT$ 200 million domestic private equity fund, CDIB CAPITAL
board of GROWTH PARTNERS L.P. through the Company’s 100% owned subsidiary, GPPC V None
directors Investment Co., Ltd.
The 4 [th] 2. It is resolved to engage Crowe (TW) CPAs to audit 2018 financial statements and conduct V None
meeting the independence analysis.
30 January, The resolution of audit committee (30 January, 2018): All members of audit committee resolved.
2018 The Company’s response to audit committee opinion: All members of audit committee resolved.
The 12 [th] 1. It is resolves to pass 2017 individual and consolidated financial statements. V None
board of 2. It is resolved to pass 2017 earnings distribution. V None
directors 3. It is resolved to pass the issuance of Statement of the internal control system of 2017. V None
The 5 [th] 4. It is resolved to pass that the Company through the third place to invest “British Virgin
meeting Islands Land and Sea Capital Corp.” CNY 267,520,000 and then through British Virgin
22 March, Islands Land and Sea Capital Corp. to reinvest and set up a new company (the company V None
2018 name has not yet decided) to jointly build ABS factory with annual manufacture capacity
450,000 tons.
5.It is resolved to pass that the Company through 100% reinvested subsidiary, Jin Ya (B.V.I)
Investment limited, to invest private equity fund, CDIB CAPITAL GLOBAL V None
OPPORTUNITIES FUND, US$ 30 million.
The resolution result of audit committee (22 March, 2018): All members of audit committee resolved.
The Company’s response to audit committee opinion: All members of audit committee resolved.
The 12 [th] 1. It is resolved to pass the first quarter financial statements for the year of 2018. V None
board of The resolution result of audit committee (10 May, 2018): All members of audit committee resolved.
directors The Company’s response to audit committee opinion: All members of audit committee resolved.
The 7 [th]
meeting
10 May,
2018
The 12 [th] 1. It is resolved to pass the second quarter financial statements for the year of 2018. V None
board of The resolution result of audit committee (9 August 2018): All members of audit committee resolved.
directors The Company’s response to audit committee opinion: All members of audit committee resolved.
The 8 [th]
meeting
9 August,
2018
The 12 [th] 1 It is resolved to pass that the Company through the third place to invest “British Virgin
board of Islands Land and Sea Capital Corp.” CNY 279,680,000 and then through British Virgin
V None
directors Islands Land and Sea Capital Corp. to reinvest Zhangzhou Chimei Chemical Company
The 9 [th] Limited to jointly build PC and PETG item.
meeting 2. It is resolved that the Company through the Company’s subsidiary, GPPC Investment Co.,
V None
9 October, Ltd., reinvests domestic food and beverage business.
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2018 The resolution result of audit committee (9 October 2018): All members of audit committee resolved.
The Company’s response to audit committee opinion: All members of audit committee resolved.
The 12 [th] 1. It is resolved to pass the 2019 internal audit operation annual audit plan. V None
board of 2 It is resolved to pass the third quarter financial statements for the year of 2018. V None
directors 3. It is resolved to pass that the Company through the cash capital increase of Zhenjiang V None
The 10 [th] Chimei Chemical Company Limited to build the dangerous waste handling equipment.
meeting The resolution result of audit committee (9 November 2018): All members of audit committee resolved.
9 November, The Company’s response to audit committee opinion: All members of audit committee resolved.
2018
II. As for the implementation of the recusal of independent director due to conflict of interest, it should record the
name of independent directors, the content of the item, the reason of recusal of independent director due to
conflict of interest and the resolution result: None.
III. The communication between independent directors and internal audit supervisor (the communication of
important item of company finance operation, its method and results, etc.)
1. The internal audit supervisor and independent directors should meet at least once a quarter. If there is any
special circumstance, the internal audit supervisor should report to audit committee immediately. As of the
publication date of this annual report, there is no such special circumstances. The communication between
audit committee and internal audit supervisor is good.
Date Communication key point Independent director’s
opinion
30 January, The fourth quarter of audit implementation and follow-up matters report for the year of 2017 There is no opinion in
2018 this meeting
22 March, 1. Report of internal audit system self-evaluation result for the year of 2017. There is no opinion in
2018 2. The effective evaluation of 2017 internal audit. According to the result of self-evaluation and this meeting
internal audit, it is evaluated the effectiveness of overall internal audit system and provide the
Statement of the internal control system and submit to audit committee.
10 May, 2018 The first quarter of audit implementation and follow-up matters report for the year of 2018. There is no opinion in
this meeting
9 August, 2018 The second quarter of audit implementation and follow-up matters report for the year of 2018. There is no opinion in
this meeting
9 October, The third quarter of audit implementation and follow-up matters report for the year of 2018. There is no opinion in
2018 this meeting
9 November, Submit 2019 audit plan There is no opinion in
2018 this meeting
2. The members of audit committee and independent directors should meet at least once a quarter. As of the
publication of this annual report, there is no such circumstance. The communication between audit
committee and CPA is good.
Date Communication key point Independent
director’s
opinion
22 March, The accountant prepares reports focusing on the material and significant audit item of 2017 There is no opinion in
2018 financial statement, the effect on implementation of international financial reporting standards in this meeting
2018, the preliminary evaluation of No. 16 “Leasing” of international financial reporting
standards, the evaluation of accountant independence and the communication with independent
director and member of audit committee.
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Note:

*If independent directors resigned before the end of the fiscal year, the resignation date should be listed in the note column. The actual attendance rate (%) is calculated based on the number of meetings of the Audit Committee during its incumbency and its actual attendance.
If the independent director is reelected before the end of the fiscal year, both the original and new independent directors should be listed. In the note column, it should be noted whether the independent director is original, new-elected, renewal and its reelection date. The actual attendance rate (%) is calculated based on the number of meetings of the Audit Committee during its incumbency and its actual attendance.

The training of directors:

Position	Name	Training date	The organizer	The name of training course	The hour of training course	Does the training comply with regulation?
Chairman	YANG, PIN-CH ENG	11 December, 2018 to 11 December, 2018	Taiwan Corporate Governance Association	The workshop of responsible person of listed companies.	3	Yes
		23 October, 2018 to 23 October, 2018	Taiwan Corporate Governance Association	The shareholding planning of listed or over-the-counter companies and the reelection of directors and supervisors.	3	Yes
Independent director	SHIH,K UANG- HSUN 21 June, 2018 to 21 June, 2018 24 May, 2018 to 21 May,2018		Taiwan Securities Association	Taiwan Anti-tax avoidance laws, Common Return Standards (CRS) mechanism and the impact of FATCA	3	Yes
		24 May, 2018 to 21 May,2018	Taiwan Securities Association	Financial crime and fraud risk	3	Yes

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11 September, 2018
Taiwan Academy of Information Security Strategy and Practice
to 11 September, 3 Yes
CHEN, Banking and Finance Planning
Independent 2018
SUNG-
director Development trend and important regulations of
TUNG 20 April, 2018 to 20 Taiwan Corporate
money laundering and information terrorism 3 Yes
April, 2018 Governance Association
prevention
Innovative technology applications - from block
7 August, 2018 to 7 Taipei Foundation Of
chain, internet of things to artificial intelligence 3 Yes
CHEN, August, 2018 Finance
Independent finance
WEN-T
director Chinese National
SUNG 24 July, 2018 to 24 How to effectively play the role of independent
Association of Industry 3 Yes
July, 2018 directors and strengthen corporate governance
and Commerce, Taiwan
Chinese National Practical seminars on enterprises coming to
27 March, 2018 to 27
Association of Industry Taiwan and cross-border investment mergers and 3 Yes
TIEN,C March, 2018
and Commerce, Taiwan acquisitions in 2018
Director HEN-C
Chinese National
HING 22 March, 2018 to 22 Association of Industry Case analysis of significant economic crimes of 3 Yes
March,2018 enterprises and related legal responsibilities
and Commerce, Taiwan
18 December, 2018 Taiwan Corporate
Governance Association Trends and challenges in information security
to 18 December, 3 Yes
governance
TSENG 2018
,CHIA- 19 September, 2018 The 14 [th] Corporate Governance International
Director Taiwan Corporate
HSIUN to 19 September, Governance Association Forum - Director’s Compliance and Oversight 5 Yes
G 2018 Obligations
28 June, 2018 to 28 Taipei Foundation Of How do directors perform due diligence and
3 Yes
June, 2018 Finance loyalty obligations?
25 December, 2018 The impact of the revision of the company law
Taiwan Corporate
HUAN to 25 December, on corporate governance - starting from the 3 Yes
Governance Association
Director G,HSI- 2018 dispute case
HUI 26 October, 2018 to Securities and Futures
2018 Prevention of Insider Trading Conference 3 Yes
26 October, 2018 Institute
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The training of managers:
The hour of
Position Name Training date The organizer The name of training course training
course
TSENG,C
President HIA-HSI 28 June, 2018 [Taiwan Academy of Banking ] The 8 [th] term of How directors performance due diligence and 3
and Finance loyalty obligations
UNG
Vice
president of CHEN,C 24 January,
CTBC Bank The brief meeting of shareholders service regulations. 3
financial HING-FU 2018
department
Vice
president of CHEN,C 6 March,
TWSE 2018 Corporate Governance Review Conference 3
financial HING-FU 2018
department
Director of
CHEN,LI 17 April, UCP 600 - Uniform Customs and Practice for Documentary
accounting Plastics business department 2
NG-CHU 2018 Credits
department
Director of
accounting CHEN,LING-CHU [13 June, 2018] [Accounting ] Development Foundation Research and The communication of significant item in audit report, its impact and response measures 4
department
Director of
CHEN,LI 15 August, Accounting Research and No. 21 the impact on exchange rate of international financial
accounting 4
NG-CHU 2018 Development Foundation report standards
department
Director of
CHEN,LI 4 September,
accounting Crowe (TW) CPAs Conference of 2018 newly revised Company Act 4
NG-CHU 2018
department
Director of
CHEN,LI 12 December, Accounting Research and Discussion on the Hot Issues of International Money Laundering
accounting 4
NG-CHU 2018 Development Foundation Crime and Its Legal Responsibility
department
----- End of picture text -----

(III) The state of the Company’s implementation of corporate governance, any departure of such implementation from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such departure.

The state of the Company’s implementation of corporate governance, any departure of such implementation from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such departure.

departure.
	State of implementation(Note)		The departure of
Assessment item	Yes No Brief		implementation from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies, and the reason forany suchdeparture.
I. Does the Company disclose corporate governance guideline in according to Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies?	V The Company has not prescribed corporate governance guideline.		Not applicable
II. The Company’s shareholding structure and shareholder interest (1) Does the Company prescribe internal process to handle shareholder’s suggestion, question, dispute and litigation and implement in according to the process? (2) Does the Company have the list of controlling major shareholders and their ultimate controllers? (3) Does the Company establish and implement the risk control and firewall mechanism with its affiliates? (4)Does the Company prescribeinternal	V V V V	The Company has designated spokesperson and acting spoke person and has established shareholder service department and has designated dedicated person to handle shareholder proposals, disputes and related matters. The Company controls the shareholder list in according to the list provided by shareholder service agent. The transaction between the Company and its affiliate is in accordance with relevant laws and the Company disclose information on behalf of its affiliates.Each companyhas prescribedinternal	Compliance Compliance Compliance Compliance

	State of implementation(Note)	State of implementation(Note)	State of implementation(Note)	The departure of
Assessment item	Yes No Brief			implementation from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such departure.
regulation to prohibit insider using nondisclosure information to trade securities?	audit system and internal audit regulation and implement in according to the system and regulation. The Company has prescribed affiliate supervisory regulation and implements in according to the regulation. The Company has prescribed internal control system of “ethical conduct guideline” and “management operation to avoid insider trading” to regulation personnel not to use the Company’s property, information or personal benefit by the use of position. If the directors, supervisor, managers and employees know internal significant information, thoseperson should comply with Article 157-1 of Securities Exchange Act and avoid trading the Company’s shares or other equity based onsecurities.
III. The Composition and authority and responsibility of board of directors (1) Does the board of directors prescribe a diversified member policy and implement that policy? (2) Except the establishment of remuneration committee and audit committee, does the Company voluntarily establish other functional committees? (3) Does the Company prescribe the rule of performance assessment of board of directors and its performance evaluation method andits assessmentmethod, and	V	V V	The directors of the Company have backgrounds in legal and chemicals. The Company does not establish relevant functional committee. The Company does not prescribe the regulation of director performance evaluation. The Company evaluates the independence and competency ofthe CPAs atleast once a year.	Compliance Not applicable Not applicable

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Assessment item	Yes	No	Brief	Best-Practice Principles for TWSE/TPEx Listed Companies, and the reason forany suchdeparture.

enforce performance evaluation annually? (4) Does the Company regularly evaluate the independence of the CPAs?	V		The evaluation is based on Article 47 of CPA law and Standard No. 10 of CPA code of professional ethics “Accountant independence evaluation form “. The Company obtained independence undertaking from CPAs and submit those result to the 11th meeting of the 2ndaudit committee on 21 March, 2019 and resolved by the 12thmeeting of 12thboard of directors. After Evaluation, the Company finds that CPA HSIAO,YING-CHIA and CPA WANG,WU-CHANG of Crowe (TW) CPAs are compliance with the Company’s independence evaluation standard. The key items of “Accountant independence evaluation form” are as below: 1. Does the company obtained accountant independence undertaking? 2.The accountant does not have direct or indirect significant financial conflict of interest with the delegator? 3.The accountant does not have any improper relationship with delegator. 4. The audit service team of accountant also comply with honesty, fair and independence. 5. If the accountant has served on the delegator within two years form his/her practice as an accountant, he/she cannot audit or review the delegator. 6.The name of accountant cannot be used by others. 7.The accountant and the audit service teamdonot	Compliance

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State of implementation(Note) The departure of
implementation from the
Corporate Governance
Assessment item Best-Practice Principles for
Yes No Brief
TWSE/TPEx Listed
Companies, and the reason
for any such departure.
have any shares of delegator.
8. The accountant and the delegator do not have any
funds loans. However, it will be fine if the delegator
is financial institution and the transaction is fair.
9. There is no co-investment or co-benefit-sharing
relationship between accountant and delegator.
10. The accountant does not concurrently serve the
routine work of delegator and does not get regular
pay.
11. The accountant does not get involved in
delegator’s business function of decision making.
12. The accountant does not concurrently conduct
other business which might lose its independence.
13. The accountant does not have spouse, lineal
relative by blood relationship, lineal relative by
martial and collateral relative by blood within 4 [th]
degree relationship with delegator or the
management of delegator.
14. The accountant does not receive any
commission related to business.
15. The accountant does not serve more than 7 years
(if there is internal rotation within accountant firm,
after two years the accountant cannot be
re-delegated.)
IV. Does the listed company establish dedicated V The financial department of the Company is Compliance
(concurrent) department for corporate responsible for meeting matters of board of directors
governance or have personnel to be and shareholders meeting including the meeting
responsible for corporate government date, the meeting document, and the preparation and
(including but not limited to furnishing circulation of meeting minutes, etc. In addition, the
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	State of implementation(Note)	State of implementation(Note)	The departure of
Assessment item	Yes No Brief		implementation from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies, and the reason forany suchdeparture.
necessary information to directors and supervisor for them to fulfill its duties, holding the meetings of board of directors and shareholder meeting in according to relevant regulations, registering the corporate registration and its amended registration, preparing the minutes of board ofdirectors and shareholder meeting, etc.)?	administration team is responsible for administration matters such as company registration.
V. Does the Company establish the communication channel with interested person (including but not limited to shareholders, employees, customers, and suppliers, etc.) and is there an interested person section in Company’s website to properly response to the inquiry from interested person about important CSR issues they cared?	V There is interested person section in the Company’s website and the inquiry is responded by personnel in according to the issue category.		Compliance
IV. Does the Company engage professional shareholder services agent to handle the shareholder meeting andrelatedmatter?	V The Company engaged the agency department in KGI Securities to handle the shareholder meeting andrelatedmatter.		Compliance
VII. Information disclosure (1) Does the Company set up website to disclosed financial information, business information and corporate governance information? (2) Does the Company has adopted other information disclosure method (such as to set up English website, appoint a dedicated person to collect and disclose information, enforce spokesperson	V V	The Company’s website:http:///www.gppc.com.tw The Company complies with relevant regulation about information disclosure and use MOPS to disclose and provide the Company’s financial, business, insider shareholding and corporate governance to the shareholders. The Company also discloseinformation in its website andhas dedicated	Compliance Compliance

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State of implementation(Note) The departure of
implementation from the
Corporate Governance
Assessment item Best-Practice Principles for
Yes No Brief
TWSE/TPEx Listed
Companies, and the reason
for any such departure.
mechanism, upload the investor personnel to collect and disclose the Company’s
conference video onto the Company’s information.
website)? The Company has one spokesperson and one acting
spokesperson.
VIII. Does the Company has other information V (I) The employee benefits and employee care Compliance
which is helpful to understand the important implementation of the Company are as follows:
information of corporate governance 1. The Company provide employees with
(including but not limited to employee annual health checkups in large hospitals and has
welfare, employment relationship and professional nurses located in the factory.
investor relationship, supply chain 2. The Company emphasis on employee
relationship, the rights of interested person, training. In addition to professional training, and
the implementation of directors and the Company engages English consultants for
supervisor training, the policy of risk long-term teaching to improve the employee’s
management and the risk assessment language skills.
standard and its implementation, the (II) The Company implements the spokesperson
implementation of customer policy and the system and has an acting spokesperson.
purchase of directors and officers liability Investors can fully communicate with
insurance)? spokesperson and acting spokesperson by phone or
email.
(III) The Company has purchased liability insurance
for directors.
(IV) The circumstances of the directors and
supervisors’ training, the implementation of risk
management policies and risk assessment standards,
and the implementation of customer policies are
disclosed in the annual report in accordance with the
regulations. Please refer to the relevant records in
the annual report in the website.
IX. Please explain the improvement situation and priority strengthening matter and measure to the unimproved of the corporate governance
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Assessment item	State of implementation(Note) The departure of implementation from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies, and the reason forany suchdeparture. Yes No Brief
evaluation report issued by Corporate governance center of TWSE: In respect of accountant independence, it has been listed in 2017 annual report. The 2018 corporate governance evaluation result has not announced as of the publication date of this annual report. The Company will continue “improve the information transparency” and modifies the Company’s website to disclosed relevant public information such as shareholding structure andmanagement team, etc. and sets upEnglishwebsite to provideinvestors with moreinformation.

Assessment item

State of implementation(Note)
The departure of
implementation from the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies, and the reason
forany suchdeparture.
Yes
No
Brief

evaluation report issued by Corporate governance center of TWSE:
In respect of accountant independence, it has been listed in 2017 annual report. The 2018 corporate governance evaluation result has not
announced as of the publication date of this annual report. The Company will continue
“improve the information transparency” and modifies the Company’s website to disclosed relevant public information such as shareholding
structure andmanagement team, etc. and sets upEnglishwebsite to provideinvestors with moreinformation.

Note: In respect to implementation circumstance, whether check “Yes” or “No,” the Company should brief in the summary brief column.

(IV) The composition, authority and responsibility of remuneration committee:

(1) the member of remuneration committee:

Identification (Note 1)	Condition Name Does he/she have working experience more than five years and have following professional qualification requirements Qualified the independence requirement (Note 2) 1. An instructor or higher in a department of commerce, law, finance, accounting, or other academic department related to the business needs of the company in a public or private junior college, college, or university; 2. A judge, public prosecutor, attorney, certified public accountant, or other professional or technical specialist who has passed a national examination and been awarded a certificate in a profession necessary for the business of the company. 3. Have work experience in the area of commerce, law, finance, or accounting, or otherwise necessary for the business of the company. 1 2 3 4 5 6 7 8	Condition Name Does he/she have working experience more than five years and have following professional qualification requirements Qualified the independence requirement (Note 2) 1. An instructor or higher in a department of commerce, law, finance, accounting, or other academic department related to the business needs of the company in a public or private junior college, college, or university; 2. A judge, public prosecutor, attorney, certified public accountant, or other professional or technical specialist who has passed a national examination and been awarded a certificate in a profession necessary for the business of the company. 3. Have work experience in the area of commerce, law, finance, or accounting, or otherwise necessary for the business of the company. 1 2 3 4 5 6 7 8	Condition Name Does he/she have working experience more than five years and have following professional qualification requirements Qualified the independence requirement (Note 2) 1. An instructor or higher in a department of commerce, law, finance, accounting, or other academic department related to the business needs of the company in a public or private junior college, college, or university; 2. A judge, public prosecutor, attorney, certified public accountant, or other professional or technical specialist who has passed a national examination and been awarded a certificate in a profession necessary for the business of the company. 3. Have work experience in the area of commerce, law, finance, or accounting, or otherwise necessary for the business of the company. 1 2 3 4 5 6 7 8	Condition Name Does he/she have working experience more than five years and have following professional qualification requirements Qualified the independence requirement (Note 2) 1. An instructor or higher in a department of commerce, law, finance, accounting, or other academic department related to the business needs of the company in a public or private junior college, college, or university; 2. A judge, public prosecutor, attorney, certified public accountant, or other professional or technical specialist who has passed a national examination and been awarded a certificate in a profession necessary for the business of the company. 3. Have work experience in the area of commerce, law, finance, or accounting, or otherwise necessary for the business of the company. 1 2 3 4 5 6 7 8	Condition Name Does he/she have working experience more than five years and have following professional qualification requirements Qualified the independence requirement (Note 2) 1. An instructor or higher in a department of commerce, law, finance, accounting, or other academic department related to the business needs of the company in a public or private junior college, college, or university; 2. A judge, public prosecutor, attorney, certified public accountant, or other professional or technical specialist who has passed a national examination and been awarded a certificate in a profession necessary for the business of the company. 3. Have work experience in the area of commerce, law, finance, or accounting, or otherwise necessary for the business of the company. 1 2 3 4 5 6 7 8	Condition Name Does he/she have working experience more than five years and have following professional qualification requirements Qualified the independence requirement (Note 2) 1. An instructor or higher in a department of commerce, law, finance, accounting, or other academic department related to the business needs of the company in a public or private junior college, college, or university; 2. A judge, public prosecutor, attorney, certified public accountant, or other professional or technical specialist who has passed a national examination and been awarded a certificate in a profession necessary for the business of the company. 3. Have work experience in the area of commerce, law, finance, or accounting, or otherwise necessary for the business of the company. 1 2 3 4 5 6 7 8	Condition Name Does he/she have working experience more than five years and have following professional qualification requirements Qualified the independence requirement (Note 2) 1. An instructor or higher in a department of commerce, law, finance, accounting, or other academic department related to the business needs of the company in a public or private junior college, college, or university; 2. A judge, public prosecutor, attorney, certified public accountant, or other professional or technical specialist who has passed a national examination and been awarded a certificate in a profession necessary for the business of the company. 3. Have work experience in the area of commerce, law, finance, or accounting, or otherwise necessary for the business of the company. 1 2 3 4 5 6 7 8	Condition Name Does he/she have working experience more than five years and have following professional qualification requirements Qualified the independence requirement (Note 2) 1. An instructor or higher in a department of commerce, law, finance, accounting, or other academic department related to the business needs of the company in a public or private junior college, college, or university; 2. A judge, public prosecutor, attorney, certified public accountant, or other professional or technical specialist who has passed a national examination and been awarded a certificate in a profession necessary for the business of the company. 3. Have work experience in the area of commerce, law, finance, or accounting, or otherwise necessary for the business of the company. 1 2 3 4 5 6 7 8	Condition Name Does he/she have working experience more than five years and have following professional qualification requirements Qualified the independence requirement (Note 2) 1. An instructor or higher in a department of commerce, law, finance, accounting, or other academic department related to the business needs of the company in a public or private junior college, college, or university; 2. A judge, public prosecutor, attorney, certified public accountant, or other professional or technical specialist who has passed a national examination and been awarded a certificate in a profession necessary for the business of the company. 3. Have work experience in the area of commerce, law, finance, or accounting, or otherwise necessary for the business of the company. 1 2 3 4 5 6 7 8	Condition Name Does he/she have working experience more than five years and have following professional qualification requirements Qualified the independence requirement (Note 2) 1. An instructor or higher in a department of commerce, law, finance, accounting, or other academic department related to the business needs of the company in a public or private junior college, college, or university; 2. A judge, public prosecutor, attorney, certified public accountant, or other professional or technical specialist who has passed a national examination and been awarded a certificate in a profession necessary for the business of the company. 3. Have work experience in the area of commerce, law, finance, or accounting, or otherwise necessary for the business of the company. 1 2 3 4 5 6 7 8	Condition Name Does he/she have working experience more than five years and have following professional qualification requirements Qualified the independence requirement (Note 2) 1. An instructor or higher in a department of commerce, law, finance, accounting, or other academic department related to the business needs of the company in a public or private junior college, college, or university; 2. A judge, public prosecutor, attorney, certified public accountant, or other professional or technical specialist who has passed a national examination and been awarded a certificate in a profession necessary for the business of the company. 3. Have work experience in the area of commerce, law, finance, or accounting, or otherwise necessary for the business of the company. 1 2 3 4 5 6 7 8	Condition Name Does he/she have working experience more than five years and have following professional qualification requirements Qualified the independence requirement (Note 2) 1. An instructor or higher in a department of commerce, law, finance, accounting, or other academic department related to the business needs of the company in a public or private junior college, college, or university; 2. A judge, public prosecutor, attorney, certified public accountant, or other professional or technical specialist who has passed a national examination and been awarded a certificate in a profession necessary for the business of the company. 3. Have work experience in the area of commerce, law, finance, or accounting, or otherwise necessary for the business of the company. 1 2 3 4 5 6 7 8	The number of public company that he/she concurrently served as remuneration committee member.
		1. An instructor or higher in a department of commerce, law, finance, accounting, or other academic department related to the business needs of the company in a public or private junior college, college, or university;	2. A judge, public prosecutor, attorney, certified public accountant, or other professional or technical specialist who has passed a national examination and been awarded a certificate in a profession necessary for the business of the company.	3. Have work experience in the area of commerce, law, finance, or accounting, or otherwise necessary for the business of the company. 1 2 3 4 5 6 7 8
Independent director	SHIH,KUANG-H SUN	Yes	No	Yes 									2
Independent director	CHEN,WEN-TSU NG	Yes	Yes	Yes 									1
Independent director	CHEN,SUNG-TU NG	No	Yes	Yes									0

Note 1: The identification column please fill in director, independent director, or others.

Note 2: Each member qualified below condition within two years of election or during the service term, please check “  ” below the symbol column of each condition.
（ 1 ） Not an employee of the company or any of its affiliates
（ 2 ） Not the director, supervisor of the Company or its affiliates. However, it will be fine if he/she is independent director of the Company, its parent company, its subsidiary in according the Law or other local law.
（ 3 ） Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under any other’s name, in an aggregate amount of 1 percent or more of the total number of issued shares of the company or ranking in the top 10 in shareholding
（ 4 ） Not the spouse, collective relative within two degrees, and lineal relative within three degrees of the personnel listed in the above three paragraphs.

（ 5 ） Not a director, supervisor, or employee of a corporate shareholder that directly holds 5 percent or more of the total number of issued shares of the company or ranks in the top 5 in shareholding.
（ 6 ） Not a director, supervisor, managerial officer, or shareholder holding 5 percent or more of the shares, of a specified company or institution that has a financial or business relationship with the company.
（ 7 ） Not the business owner, partners, directors, supervisors, mangers or its spouse of professionals, sole proprietary, partnership, company or institution which proprietorships, partnerships, companies or institutions

provide business, legal, finance, accounting, etc. service or consulting to the Company or its affiliates

（ 8 ） There is no circumstance in the subparagraphs of Article 30 of the Company Act.

(2) The authority and responsibility of remuneration committee

The committee shall exercise the due care of a good administrator in performing its authority and responsibility and submit its proposal to board of directors for discussion:

I. Regularly review this organization and provide revision suggestion.

II. Prescribe and construct the performance target of board of directors and mangers and remuneration policy and standards and regularly review it.

III. Regular review the performance target achievement of directors and mangers and decide each one’s remuneration package and amount.

(3) The implementation of remuneration committee:
I. The Company remuneration committee has three members.

II. The term of current member: form 27 June, 2017 to 26 June, 2010. There are four meetings in the latest fiscal year and the qualification and attendance of the members are as below:

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Actual
Actual The time to
attendance rate Note
Position Name attendance attendance
(%)
times (B) by proxy
(B/A) (Note)
Convener SHIH,KUANG-HSUN 4 0 100% Renewal 27 June,
2017
Member 100% Renewal 27 June,
CHEN,SUNG-TUNG 4 0 2017
Member CHEN,WEN-TSUNG 4 0 100% Renewal 27 June,
2017
Any other matters that require reporting:
I. If the board of directors declines to adopt a recommendation of the remuneration committee, the date,
term, content of the item, resolution of the board of directors and Company’s response to
recommendation of remuneration committee should be recorded (such as that if the board of
directors has passed a remuneration more favorable to the recommendation of remuneration
committee, the departure and its reason should be recorded): None.
Remuneration The content of the proposal and its follow up handling.
committee
The 3 [rd] meeting of 1. It is resolved to pass 2018 work plan.
the 3 [rd] board of 2. It is resolved to pass 2017 year-end bonus of mangers.
directors Member opinions: None.
30 January, 2018 Company response to member opinions: None.
Resolution result: Passed by all attendant members.
The 4 [th] meeting of 1. It is resolved to pass 2017 employees and directors’ remuneration.
the 3 [rd] board of 2. It is resolved to pass 2017 manager’s special bonus.
directors Member opinions: None.
22 March, 2018 Company response to member opinions: None.
Resolution result: Passed by all attendant members.
The 5 [th] meeting of 1. It is resolved to pass the pension of chairman, Wu Chun Tai.
the 3 [rd] board of 2. It is resolved the remuneration of chairman YANG,PIN-CHENG.
directors 3. It is passed to job adjustment of high-level managers. Please resolved.
10 Mary, 2018 Member opinions: None.
Company response to member opinions: None.
Resolution result: Passed by all attendant members.
The 6 [th] meeting of 1. It is resolved to pass 2017 employees (including managers) and directors’ remuneration.
the 3 [rd] board of 2. It is resolved to pass the manager salary adjustment. Please resolve.
directors Member opinions: None.
9 August, 2018 Company response to member opinions: None.
Resolution result: Passed by all attendant members.
The 7 [th] meeting of 1. It is resolved to pass 2019 work plan.
the 3 [rd] board of 2. It is resolved to pass 2018 year-end bonus of mangers.
directors 4. It is resolved the promotion proposal of manager CHEN,CHING-FU , and manager LIN,WEN-HUI.
23 January, 2019 Member opinions: None.
Company response to member opinions: None.
Resolution result: Passed by all attendant members.
The 8 [th] meeting of 1. It is resolved to pass 2018 employees and directors’ remuneration.
the 3 [rd] board of 2. It is resolved to pass 2018 manager’s special bonus.
directors Member opinions: None.
21 March, 2018 Company response to member opinions: None.
Resolution result: Passed by all attendant members.
II. If with respect to any resolution of the remuneration committee, any member has a dissenting or
qualified opinion that is on record or stated in a written statement, the date, term, item, resolution of
the board of directors, the recommendation of all members, and Company’s response to
recommendation of each member should be recorded: None.
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Note:

(1) *If members of remuneration committee resigned before the end of the fiscal year, the resignation date should be listed in the note column. The actual attendance rate(%) is calculated based on the number of meetings of the Audit Committee during its incumbency and its actual attendance.
(2) * If the member of audit committee is reelected before the end of the fiscal year, both the original and new independent directors should be listed. In the note column, it should be noted whether the independent director is original, new-elected, renewal and its reelection date. The actual attendance rate(%) is calculated based on the number of meetings of the Audit Committee during its incumbency and its actual attendance.

(V) The implementation of corporate social responsibility

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implementation situation (Note 1) The difference with Corporate
Social Responsibility Best
Assessment item Practice Principles for
Yes No Brief (Note 2)
TWSE/GTSM Listed Companies
and its reason.
I. The implementation of corporate governance
(1) Does the Company prescribe policy or system for V The Company announce its corporate social There is no difference
corporate social responsibility, and that the responsibility policy in its website
Company regularly review the implementation (www.gppc.com.tw) and review its implementation
result regularly result every year.
(2) Does the Company regularly hold the training about Every year, the Company’s ESH training course has There is no difference
V
corporate social responsibility? such course.
(3) Does the Company established dedicate The Company established dedicated department to There is no difference
V
(concurrent) department to enforce corporate responsible for corporate governance. Please refer
social responsibility? Was the corporate social to corporate social responsibility report page 8.
responsibility handled by the high-level
management authorized by board of directors
and the handing situation reported to the board
of directors?
(4) Does the Company prescribe reasonable V Please refer to corporate social responsibility report There is no difference
compensation policy and combine the section1, chapter 4.
employee performance examination system and
the policy of corporate social responsibility and
establish clear and effective reward and
disciplinary system?
II. Develop sustainable environment
(1) Is the Company committed to improving the V Please refer to corporate social responsibility report There is no difference
utilization efficiency of various resources and section2, chapter 3.
using recycled materials with low impact on the
environment?
(2) Does the Company establish a suitable V The Company has obtained ISO14001 There is no difference
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	implementation situation (Note 1)	implementation situation (Note 1)	The difference with Corporate
Assessment item	Yes No Brief (Note 2)		Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies anditsreason.
environmental management system based on its industrial characteristics? (3) Does the Company pay attention to the impact of climate change on operational activities, and implement greenhouse gas check, prescribe the Company’s energy conservation and carbon reduction and greenhouse gas reduction strategies? V environmental management system certification Please refer to corporate social responsibility report section2, chapter 3.			There is no difference
III. Protect the public interest (1) Does the Company prescribe relevant management policy and process in according to relevant laws and regulations and international human rights treaty? (2) Does the Company establish the employee compliant mechanism and channel and handle it properly? (3) Does the Company provide employee safety and health working environment and regular train its employee about safety and health education? (4) Does the Company establish regular employee communication mechanism and use reasonable method to notify employee the operation change which might cause significant impact? (5) Does the Company establish an effective career development training program for its employees? (6) Does the Company establish relevant consumer protectionpolicy and compliant processin	V V V V V V	Please refer to corporate social responsibility report section1, chapter 4. The Company set up a professional trade union to handle all employee complaints/ Please refer to corporate social responsibility report section2, chapter 4. Regularly host members meeting of labor union. Please refer to corporate social responsibility report section1, chapter 4. The Company set ups service mailbox in the Company’s	There is no difference There is no difference There is no difference There is no difference There is no difference There is no difference

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implementation situation (Note 1) The difference with Corporate
Social Responsibility Best
Assessment item Practice Principles for
Yes No Brief (Note 2)
TWSE/GTSM Listed Companies
and its reason.
R&D, procurement, manufacture, operation and
service process? There is no difference
(7) Does the Company’s market and label of the V The Company conduct GHS chemical labeling
product and service comply with relevant international reconciliation system n accordance
regulations and international guideline? with the provisions of the Occupational Safety and
Health Law.
(8) Before doing business with the supplier, does the V Conduct in accordance with supplier review There is no difference
Company assess whether the supplier has the management guideline.
record of affecting the environment or society?
(IX) Does the Company put the term that if the supplier V Conduct in accordance with supplier review There is no difference
violates corporate social responsibility policy
management guideline.
and cause material impact on the environment
and society, the Company has the right to
terminate the contract into the agreement with
main supplier?
IV. Improve information disclosure
(1) Does the Company disclose relevant and reliable V The Company public its annual corporate social There is no difference
CSR information on its website or MOPS? responsibility report in its website
(www.gppc.com.tw)
V. Does the Company prescribe its corporate social responsibility guideline in according to Corporate Social Responsibility Best Practice Principles for
TWSE/GTSM Listed Companies? Please narrate its implementation and its difference situation from the guideline: Not applicable.
IV. Other important information helpful to understand the implementation of corporate social responsibility: Please refer to relevant information about
corporate social responsibility in the Company’s website (www.gppc.com.tw)
VII. Does the Company’s social responsibility repot pass inspection standard of relevant verification institution? If yes, please list: None.
Note 1: In respect to implementation circumstance, whether check “Yes” or “No,” the Company should brief in the summary brief column.
Note 2: The Company has drafted corporate social responsibility report. The brief can be replaced by the not with index reference to the corporate
social responsibility repot.
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(VI) The enforcement and implementation measure of ethical corporate management of the Company: Implementation of faith business

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Evaluation item	Yes	No	Brief	Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies.

I. The adoption of ethical corporate management policy and guideline (1) Does the Company specify the policy and rules of ethical corporate management in internal rules or external document and does the board of directors or the management vigorously fulfill their ethical management commitment? (2) Does the Company prescribe guideline to prevent unfaith behavior and prescribe and implement the process, guideline, discipline of violation and compliant system? (3) Does the Company take protective measures towards activitieslistedinSection 2of Article 7 of Ethical	V V V		In the introduction in the Company’s website, it is disclosed that the Company’s business concept is “humble leads to peach and integrity leads to trust.” The board of directors resolved to passed “ethical management policy” on 4 July, 2012 to establish the business culture of honest business management and good business operation model. “Ethical management policy” regulate the directors (including independent directors), managers, employees or someone has controlling power of the Company. During the course of business, they cannot directly or indirectly provide, commit, require, or receive any unfair benefit. The scope of avoidance includes: 1. offering or accepting bribes. 2. Providing illegal political contributions 3. Improper charity donation or sponsorship. 4. Provide or accept unreasonable gifts, hospitality or other improper benefits Please refer to the Company’s “ethical management policy” The end of the document.	Compliance Compliance Compliance

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implementation situation (Note 1) The departure and its reason
compared to Corporate
Social Responsibility Best
Evaluation item
Yes No Brief Practice Principles for
TWSE/GTSM Listed
Companies.
Management Guideline of Listed or
Over-The-Counter Company and other business
activities that have higher unethical risk?
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Evaluation item Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies. Yes No Brief	Evaluation item Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies. Yes No Brief	Evaluation item Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies. Yes No Brief	Evaluation item Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies. Yes No Brief	Evaluation item Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies. Yes No Brief
Management Guideline of Listed or Over-The-Counter Company and other business activities thathavehigherunethical risk?

II. Fulfillment of ethical corporate management. (1) Does the Company evaluate the integrity record of its transaction partner and put the terms of integrity into the agreement between them? (2) Dose the Company establish dedicate (concurrent) department to enforce ethical corporate management and regularly submit the implementation report to board of directors? (3) Does the Company prescribe the policy to prevent conflict-of-interest and provide proper communication channel and implement the policy? (4) Does the Company establish sound accounting system and internal control system to fulfill ethical corporate management? Does the internal audit department regularly inspect or does the Company engage the CPAto audit?	V V V V	V	In the procurement process in the Company’s internal control operation, there is review system towards customers and suppliers. The agreement between Company and them sets out rights and obligation of both parties. The internal audit personnel regularly audit the Company’s system compliance and made audit report to board of directors. “Ethical management policy” clearly requires that if directors himself/herself or its represented juristic person has conflict of interest on the proposed proposal of board of directors and might hurt the Company’s interest, the director can express its opinion and answer questions but the director cannot discuss and vote and should avoid and cannot be authorized by other directors to vote on his/her behalf. The Company’s accountant system and internal audit system is prescribed incompliance with laws and government regulations and the practical needs of the Company; the audit personnel have audit plan andreportits auditresult to board ofdirectors.	Compliance Compliance Compliance Compliance

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implementation situation (Note 1) The departure and its reason
compared to Corporate
Social Responsibility Best
Evaluation item
Yes No Brief Practice Principles for
TWSE/GTSM Listed
Companies.
(5) Does the Company regularly host internal or external V V The Company upload ethical management policy on Compliance
training related ethical corporate management? its website for employee’s reference and will held
training in according to practical needs.
III. The implementation of Company’s reporting system
(1) Does the Company prescribe a clear reporting and V The Company has clearly prescribed compliant and Compliance
reward system, establish convenient reporting punishment system in ethical management policy
channel and appoint a proper dedicate personnel for and publicized it on the Company’s website.
the accursed person? V Compliance
(2) Does the Company prescribe standard of process and The end of the document.
relevant confidential measure to handling the
report?
(3) Does the Company adopt measures to prevent the V The end of the document. Compliance
reporting person from unfair treatment?
IV. Improve information disclosure
(1) Does the Company disclose its Ethical Corporate V The Company has clearly prescribed compliant and Compliance
Management Best Practice Principles and its punishment system in ethical management policy
implementation in Company’s website and MOPS? and publicized it on the Company’s website .
V. If the Company prescribes its Ethical Corporate Management Best Practice Principles in reference to Corporate Social Responsibility Best Practice
Principles for TWSE/GTSM Listed Companies, then describe the implementation departure between them: Not applicable.
IV. Other important information which is helpful to understand the implementation of ethical management of the Company (such as if the Company
reviewed and amended its Ethical Corporate Management Best Practice Principles.): None.
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Note 1: In respect to implementation circumstance, whether check “Yes” or “No,” the Company should brief in the summary brief column.

(VII) If the Company prescribed the rule of corporate governance and relevant regulations, the Company should disclose its search method: The Company has prescribed “ethical management policy” and publicized it on the Company’s website.

(VIII) It may be disclosed if there is any other important information which is helpful to under the implementation of corporate governance of the Company:

The operation process of material information disclosure is as below: It can search on the Company’s website and MOPS. 1. The guideline of the responsible and concurrent department of the Company when handling “material information”

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Content The organizer The input department
Material Information in this guideline means following matters:
I. Dishonor of a negotiable instrument due to insufficient deposits and notation of settlement subsequent to dishonor of a Financial management Financial management
negotiable instrument, refusal of a financial institution to honor a transaction, or other loss of credit of a listed company or a department department
responsible person, parent company, or subsidiary thereof, or a material change in shareholding of the parent company; or,
after dishonor of a negotiable instrument of a listed company due to insufficient deposits or refusal of a financial institution
to honor a transaction of a listed company, any alteration of trading method, suspension of trading, or delisting of the stock
thereof, and the status of any application to restore the original conditions.
II. Any material effect on company finances or business resulting from any litigious or non-litigious matter, administrative Financial management Financial management
disposition, contentious administrative procedure, provisional attachment, provisional injunction, or compulsory execution, department department
with respect to a listed company or a responsible person thereof; or a chairperson or managerial officer of the company
violates the Securities and Exchange Act, Futures Trading Act, Company Act, Banking Act, Insurance Act, Act Governing
Bills Finance Business, Financial Holding Company Act, or Commercial Accounting Act, or is indicted for a crime of
corruption malfeasance in office, fraud, breach of trust, or misappropriation.
III. 3. Any material effect on company finances or business resulting from any serious decrease in output or complete or partial Kaohsiung factory manager Financial management
suspension of work, leasing out of a company plant or principal equipment, or pledge or mortgage of all or a principal Spokesperson (concurrent) department
portion of a company’s assets.
IV. Any event set forth in Article 185, paragraph 1 of the Company Act of the Republic of China (ROC). Financial management Financial management
department department
V. Reorganization or bankruptcy procedure of a listed company or parent or subsidiary thereof, and any and all events Assistant general manager Financial management
occurring in the course of such procedure, including any petition made to a court and any notice given or ruling handed of financial department department
down by a court, or any ruling prohibiting transfer of shares or any precautionary measure ordered by a court under relevant
laws, or any material change in any of the above matters.
VI. Appointment of or change in chairman, general manager, a juristic-person director or supervisor or representative thereof, Financial management Financial management
an independent director, a natural-person director or supervisor, or a member of the functional committee established department department
pursuant to the Securities and Exchange Act, or change in one-third or more of directors, or in the case of a primary listed
company, where there is no independent director with a registered household address in the ROC.
VII. Change of certified public accountant (CPA) for any reason other than internal adjustments within the certifying accounting Accounting department Accounting department
firm.
VIII. Personnel changes such as a change of spokesperson, acting spokesperson, important operations officer (chief executive General manager office Financial management
officer, chief operating officer, chief marketing officer, or chief strategy officer), principal financial officer, principal department
accounting officer, research and development officer, chief internal auditor, or in the case of a primary listed company, of
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its litigious or non-litigious agent.	its litigious or non-litigious agent.
IX. Change in accounting year, or any accounting change resolved upon by the board of directors that is required to be submitted for the competent authority’s approval and publicly announced and reported in accordance with the applicable regulations governing the preparation of financial reports adopted by the competent authority for the relevant industry, or anynon-approval bythe competent authorityof anyapplication made to the competent authorityfor an accountingchange. Accounting department		Accounting department
X. Any material effect on company finances or business resulting from any signing, amendment, termination, or rescission of an important memorandum of understanding, a plan for a strategic alliance or other business cooperation or mutual non-competition commitment, or an important contract, change in any material respect of a business plan, completion of development of a new product, successful development and formal entry into the full-scale production stage of an experimentalproduct,or majorprogress in the development of a newproduct or technology. General manager		Financial management department
XI. Resolution by the board of directors to carry out a capital reduction, merger or consolidation, division, acquisition, exchange or conversion of shares or transfer of shares from another, dissolution, issue of new stock for capital increase, record date of a capital reduction or cash capital increase, issue of corporate bonds, issue of employee stock option certificates, issue of new restricted employee shares, issue of other securities, private placement of securities, change in par value per share, participation in the establishment of or conversion into a financial holding company or investment holding company or subsidiary thereof, or any material change in any of the above matters; or failure by companies participating in a merger, consolidation, division, acquisition, or transfer of shares from another, to convene on the same day and pass resolutions by their boards of directors or shareholders meetings, or inability to convene a subsequent shareholders meeting of a company participating in a merger, consolidation, division, acquisition, or transfer of shares from another, or veto by either side of the proposal for merger, consolidation, division, acquisition, or transfer of shares from another; or resolution of the board of directors to cancel a merger or consolidation during the implementation of the merger or consolidation plan following the initial board resolution in favor of the merger or consolidation. Financial management department		Financial management department
XII. The date, time, and venue of an investor conference that a company holds or is invited to attend and relevant information connected with it, or the disclosure by any other means of financial and business information that has not been entered into the MarketObservation PostSystem.	Financial management department	Financial management department
XIII. A resolution by the board of directors to publish financial forecast information, the inapplicability of such financial forecast information, or the correction or updating of such financial forecast information, or, in the case of a company that has published complete financial forecasts, when the difference in any of the following reaches 20 percent or greater, and the sum involved reaches NT$30 million and 0.5 percent of share capital: (I) The difference between the self-assessed (unaudited) comprehensive income as publicly disclosed and filed within 1 month after the close of the fiscal year and the forecasted comprehensive income as most recently publicly disclosed and filed. (II) The difference between the actual comprehensive income stated in the publicly disclosed and filed annual financial report and the forecasted comprehensive income. (III) The difference between the actual comprehensive income stated in the publicly disclosed and filed annual financial report and the self-assessed (unaudited) comprehensive income as publicly disclosed and filed within 1 month after the close of the fiscal year. In the case of a companywhose shares have nopar value or apar value other than NT$10,for the calculation of the	Accounting department	Accounting department

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aforesaid 0.5 percent of share capital under the forepart of this paragraph, 0.25 percent of net worth shall be substituted.
XIV. Resolution by the board of directors to distribute or not to distribute dividends, or a change in dividend distributions by a Financial management Financial management
resolution of the board of directors or a shareholders meeting, or resolution of a record date for dividend distribution, or department department
change of date of distribution of cash dividends after an ex-dividend announcement, or failure to distribute cash dividends
by the date set for distribution of the cash dividends.
XV. Resolution by the board of directors or a shareholders meeting to directly or indirectly carry out an investment plan of an Financial management Financial management
amount reaching not less than 20 percent of the company’s share capital or NT$1 billion, or any material change in any of department department
the above matters. In the case of a company whose shares have no par value or a par value other than NT$10, for the
calculation of the aforesaid 20 percent of share capital, 10 percent of net worth shall be substituted.
XVI. A change by resolution of the board of directors in a plan for capital increase by cash or offering of corporate bonds after Financial management Financial management
such plan has become effective upon registration, or a change by resolution of the board of directors in a plan for private department department
placement of securities after passage of the plan by a resolution of the board of directors or a shareholders meeting.
XVII.Resolution of the board of directors on the date for convening an ordinary shareholders meeting or special shareholders Financial management Financial management
meeting, the cause or subjects of such a meeting, or the date of suspension of changes to entries in the shareholders’ roster department department
XVIII. Important resolution of a regular shareholders meeting or special shareholders meeting. Financial management Financial management
department department
XIX. There is any material event of internal control fraud, non arms-length transaction, or defalcation of assets. Financial management Financial management
department department
XX. Where any of the following provisions is met: Financial management Financial management
(I) An acquisition or disposal, by the TWSE listed company or by a subsidiary whose shares have not been publicly department department
issued domestically, of assets within the scope of Article 3 of the Regulations Governing Acquisition or Disposal of
Assets by Public Companies adopted by the competent authority and where the circumstances of Article 30 or 31 of
those Regulations require public disclosure and filing, with the exception of the following circumstances:
1. Public disclosure has already been made of a merger, consolidation, division, acquisition, or transfer of shares
from another pursuant to subparagraph 11 of this paragraph.
2. Public disclosure has already been made of an acquisition or disposal of privately placed securities pursuant to
subparagraph 24 of this paragraph.
3. The information pertains to derivatives trades that must be reported by the 10th of each month
4. An acquisition or disposal of any type of open-end fund or any guaranteed interest-bearing wealth management
products within three months issued by commercial bank.
(II) Public disclosure and filing is required in the event of any unrealized losses on derivatives trading amounting to 3
percent or more of net worth.
XXI. Resolution by the board of directors (or a shareholders meeting) to permit a managerial officer (or director) to engage in Financial management Financial management
competitive conduct, or knowledge by the company that a managerial officer is operating the same kind of business department department
independently or on behalf of another person, or a director is involved in conduct within the company’s scope of business
independently or on behalf of another person, and the investment or business that the managerial officer or director is
engaged in is a Mainland-area enterprise, and there has been any failure to duly obtain permission from the board of
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directors(or a shareholders meeting),or there is anymaterial change in anyof the above matters.
XXII. Public disclosure and filing of endorsements and guarantees by the listed company as required under Article 25 of the RegulationsGoverningLoans of Funds and Endorsements andGuarantees byPublicCompanies.	Financial management department Financial management department
XXIII. Public disclosure and filing of monetary loans to other persons by the listed company as required under Article 22 of the Regulations Governing Loans of Funds and Endorsements and Guarantees by Public Companies promulgated by the competent authority.	Financial management department Financial management department
XXIV. Acquisition or disposal of privately placed securities by a listed company or a subsidiary thereof.	Financial management department Financial management department
XXV. Suspension of business transactions between the listed company and a major purchaser or supplier, where the purchaser or supplier accounted for 10 percent or more of the company’s total amount of sales or purchases as stated in the parent companyonly (or individual)financial report for the most recent fiscalyear.	Assistant general manager of sales department Financial management department
XXVI. Occurrence of a disaster, group protest, strike, environmental pollution event, or any other material event, resulting in any of the following situations: (I) where the company incurs a material loss; (II) where a relevant authority orders suspension of work, suspension of business, termination of business, or revokes or voids a permit pertaining to pollution; (III) where the administrative fines for one single event have accumulated to NT$1 million or more.	Kaohsiung factory manager Financial management department
XXVII. Finalization of negotiation results of a negotiation meeting called between the listed company and a creditor bank.	Financial management department	Financial management department
XXVIII. Dishonor of a negotiable instrument, filing for bankruptcy or reorganization, or any other similar circumstance, on the part of a related party of the listed company or principal debtor to the company or a joint and several guarantor of a principal debtor; or inability by a principal obligor, in favor of whom the listed company has made an endorsement or guarantee,to settle a matured negotiable instrument,loan,or other obligation.	Financial management department	Financial management department
XXIX. Any re-filing and public disclosure of the regular annually filed internal control system statement due to any change in the content thereof; or obtaining of the Internal Control Special Audit Report for the special audit of internal controls conducted bytheCPA.	Audit	Audit
XXX. Failure to make a public disclosure or a filing within a prescribed time limit; an error or omission in a financial report prepared by a listed company, with respect to which Article 6 of the Enforcement Rules to the Securities and Exchange Act requires a correction to and further a restatement of the financial report; a CPA issues an audit report containing an opinion other than an unqualified opinion or a review report containing an opinion other than an unqualified or modified unqualified opinion on a publicly disclosed and filed annual or semiannual financial report, except in cases where the CPA issues a qualified audit or review report for the reason of annual amortization of losses, as permitted by a law or regulation, or for the reason that the amount of investment by a non-major subsidiary or of investment accounted for using the equity method, and the gain or loss thereupon, as presented in the interim financial report is calculated on the basis of the investee company’s financial report that have not been audited or reviewed by a CPA. However, if the above-mentioned non-major subsidiary is a subsidiary of a financial holding company, the subsidiary’s interim financial report shall be audited or reviewed bya CPA in accordance with applicable laws and regulations.	Accounting department	Accounting department

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XXXI. (delete)
XXXII. Insufficient centralized custody ratio after stocks have been placed in centralized custody pursuant to regulations and Financial management Financial management
prior to expiry of the custody period, as the result of withdrawal, due to a court execution order or some other reason, of department department
stocks of personnel whose stocks had been placed in centralized custody.
XXXIII. Occurrence of any of the changes in shareholding set forth in Article 369-8, paragraph 1 or 2 of the Company Act Financial management Financial management
and receipt of notice of the same. department department
XXXIV. A director or supervisor is subject to a provisional injunction suspending them from the exercise of their powers or is Financial management Financial management
subject to an emergency disposition; or, a director is subject to a provisional injunction suspending the director from the department department
exercise of powers or is subject to an emergency disposition and the board of directors is thereby rendered unable to
exercise its powers.
XXXV. Any matter required to be publicly disclosed and filed by the company pursuant to the Regulations Governing Share Financial management Financial management
Repurchase by Listed and OTC Companies department department
XXXVI. Occurrence of any the following matters due to a capital reduction or change of par value per share: Financial management Financial management
(I) Completion of amendment registration of a change to capitalization. department department
(II) Passage of a plan for share replacement operations.
(III) Any subsequent failure to execute such share replacement plan.
(IV) At the time of announcement of the financial report, the listing procedures for the new shares replacing the old ones
due to the capital reduction or change of par value per share have yet to be completed, resulting in a discrepancy
between the number of common shares used as the calculation basis for net worth per share in the financial statement
and the number of outstanding shares
(V) If the TWSE listed company is required to carry out share replacement operations due to a capital reduction, and the
transferee company of the demerger is neither a TWSE listed nor a GTSM listed company, then 3 business days
before the date on which trading will resume, public disclosure and filing shall be made of the following information
for the demerged company and the transferee company of the demerger for the day prior to the record date of the
demerger: the unaudited or CPA-reviewed share capital, net worth, and net worth per share, and the CPA-attested (or
reviewed) earnings per share for the most recent period.
XXXVII. Issuance of an undertaking upon applying for listing and subsequently inability to perform the undertaking; failure to Not applicable
carry out remedial procedures within 3 months of the day of the aforesaid occurrence.
XXXVIII. Any matter required to be publicly disclosed and filed pursuant to the Regulations Governing Tender Offers for Financial management Financial management
Purchase of the Securities of a Public Company. department department
XXXIX. Revocation by the competent authority of the permit of a financial holding company or of a listed company defined Not applicable
as a bank or a securities, futures, or insurance company under Article 2 of the Organic Act Governing the Establishment of
the Financial Supervisory Commission, or disposition or administrative fines for one single event up to NT$1 million or
above by the competent authority for violation by said company of the Financial Holding Company Act, Banking Act,
Insurance Act, Act Governing Bills Finance Business, or laws and regulations relating to securities and futures, unless the
disposition requires rectification, or improvement within a prescribed time limit, without material impact on the finance or
business of the company.
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XL. The Company suspend to trading or resume dealing in according to this guideline. Financial management Financial management
department department
XLI.Increase or decrease in the number of held companies of an investment holding company. Not applicable
XLII. Resolution by the board of directors or a shareholders meeting to apply for termination of listing for trading of its Financial management Financial management
securities, or any material change in such a matter. department department
XLIII. A donation to a related party or a major donation to a non-related party under the Regulations Governing Procedure Financial management Financial management
for Board of Directors Meetings of Public Companies. department department
XLIV. Objection or expression of reservation by a member of the audit committee or remuneration committee, or by an Financial management Financial management
independent director, about a resolution by, respectively, said committee or the board of directors, that has been included in department department
a record or stated in written; for a listed company that has established an audit committee, any matter adopted with the
approval of two-thirds or more of all directors without having been passed by the audit committee; any remuneration passed
by the board of directors that is more favorable than the suggestion by the remuneration committee.
XLV. Forfeiture by the directors and supervisors as a whole of subscription rights to shares in a number reaching one-half or Financial management Financial management
more of subscribable shares upon cash capital increase of a listed company, and opening of the shares for subscription by a department department
specific person or persons through negotiation
XLVI. Where a listed company holds more than 70 percent of the total issued shares or total share capital of a TWSE listed Financial management Financial management
(or GTSM listed) subsidiary thereof; or where 70 percent of the total issued shares or total share capital of a listed company department department
is held by another TWSE listed (or GTSM listed) company.
XLVII. If a listed company issues securities outside of Taiwan, the making of any adjustment for differences in the overseas Financial management Financial management
financial report due to inconsistency in the accounting principles applied in the two places with respect to financial department department
information filed for any period in the place of overseas listing; or if the financial report of a primary listed company is not
prepared according to the generally accepted accounting principles (GAAP) as described in Article 3 of the Regulations
Governing the Preparation of Financial Reports by Securities Issuers, the differences in items between the accounting
principles employed and those of the ROC and the monetary amounts affected, and the certifying CPA’s opinion on the
aforementioned matters.
XLVIII. If the circumstances set forth in Article 53-25 of the TWSE Operating Rules exist. Accounting department Accounting department
XLIX. If the company has lost its control over its key subsidiary or a subsidiary deemed as a TWSE listed company under Financial management Financial management
Article 7, paragraph 3, or has reduced the percentage of its direct or indirect shareholding in (or contributions to) that department department
subsidiary by 10 percent or more, on an accumulative basis, in three years; those changes that have been publicly disclosed
in accordance with this paragraph, however, shall be excluded.
L. Where a key subsidiary or a subsidiary deemed as a TWSE listed company under Article 7, paragraph 3 is applying for Financial management Financial management
listing of securities in an overseas securities market for trading and one of the following applies: department department
(I) An application for listing and trading has been filed.
(II) The company becomes aware of the results of the review in the preceding Item.
LI. Any other material policy resolution of the board of directors, or other circumstances having a material effect on the Financial management Financial management
shareholders’ equity or securities prices of a listed company. department department
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2. The Company’s operation process of internal major information

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

Exchange / Proof Media departmentConcerned DirectorsBoard of General manager's office Management information (forms, records) informationRelevant
Important
resolution
Document
Important message processing
description form method
Process
Important message Job
authorization
method
Prepare a press method
release / fill in
important
information, public
explanation form
Press release
Release
 Convene a press
briefingHandling
important
information to
explain the press
conference
 Public company's
important
information
disclosure form (II)
 Public company's
important
information
disclosure form (III)
Convene a press
briefing
Declar Type in the exchange's
Internet Information
System
Drafting
Execution
Release and declaration
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(IX) The implementation of internal control

1. Internal Control System Statement

Internal Control System Statement of public company Representation that both design and implementation is effective.

(The regulation compliance in this statement is applied to all regulations as of the statement)

Grand Pacific Petrochemical Corporation Internal Control System Statement

Date: 21 March, 2019

The internal control system form 1 January, 2018 to December 31, 2018, according to the result of self-assessment is thus stated as follows:

(I) The Company acknowledges that the implementation and maintenance of internal control system is the responsibility of the Board of Directors and officers, and the Company has established such system. The internal capital system is aimed to reasonably assure that the goals such as effectiveness and the efficiency of operations (including profitability, performance and protection of assets), the reliability of financial reporting and the compliance of applicable law and regulations are achieved.
(II) The internal control system has its innate restriction. An effective internal control system can only ensure the foregoing three goals are achieved; nevertheless, due to the change of environment and conditions, the effectiveness of internal control system will be changed accordingly. However, the internal control system of the Company has self-monitoring function and the Company will take corrective action once any defect is identified.
(III) According to the effective judgment items for the internal control system specified in “Regulations Governing Establishment of Internal Control Systems by Public Companies” (hereinafter “Establishment Regulation”), the Company has made judgment whether or not the design and execution of internal control system is effective. The judgment items for internal control adopted by “Establishment Regulation” are, based on the process of management control, for classifying the internal control into five elements: 1. Control environment; 2. Risk assessments; 3. Control activities; 4. Information and communication; and 5. Monitoring. Each element also includes a certain number of items. For the foregoing items, refer to “Establishment Regulations.”
(IV) The Company has adopted the aforesaid judgment items for internal control to evaluate the effectiveness of design and execution of internal control system.
(V) Based on the above-mentioned result of evaluation, the Company concludes that the internal control system (including subsidiary supervision and management) on 31 December, 2018, including the design and execution of internal control related to the effectiveness and efficiency of operation, the reliability of financial reporting, the compliance of applicable law and regulations has been effective and they can reasonably assure the aforesaid goals have been achieved.
(VI) This statement will be the main content of annual report and prospectus and will be disclosed publicly. If the above contents have any falsehood and concealment, it will involve in the liability as mentioned in Article 20, 32, 171 and 174 of the Securities and Exchange law.
(VII) 7. This statement has been approved by the meeting of Board of Directors on 21 March, 2019 and there is no one has opposed opinion and remaining directors in presence all agree at the content of this statement.

Grand Pacific Petrochemical Corporation

Chairman: YANG,PIN-CHENG President: TSENG,CHIA-HSIUNG

Note 1: In design and implementation of internal audit system of public company. If there are any significant deficiencies, it should be explained in section 4 of internal audit system statement. It should be explained item by item the significant deficiencies found in the self-evaluation and correction action and improved situation as of the balance sheet date. Note 2: The date of this statement is the date of “the end of accounting year.”

Where a CPA has been hired to carry out a special audit of the internal control system, furnish the CPA audit report: Not applicable.

(X) For the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report, disclose any sanctions imposed in accordance with the law upon the company or its internal personnel, any sanctions imposed by the company upon its internal personnel for violations of internal control system provisions, principal deficiencies, and the state of any efforts to make improvements: None.

(XI) Material resolutions of a shareholders meeting or a board of directors meeting during the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report:

1.The material resolution of board of director during 2017 year or during the current fiscal year up to the date of publication of the annual report

Date of board of director	30 January, 2018	1. It is resolved to amend “Rules and Procedures of Board of Directors” 2. It is resolved to amend “Organization Rule of Audit Committee” 3. It is resolved that the Company through 100% owned subsidiary, GPPC Investment Co., Ltd., to reinvest NT$ 200 million the domestic private equity fund, CDIB CAPITAL GROWTH PARTNER L.P. 4. It is resolved to engage Crowe (TW) CPAs to perform the audit and review and independent evaluation of 2018 financial statements 5. It is resolved topass 2018 business budget.
Date of board of director	22 March, 2018	1. It is resolved to pass 2017 individual financial statements and consolidated financial statements. 2. It is resolved to pass 2017 employees and directors’ remuneration. 3. It is resolved to pass the 2017 earnings distribution. 4. It is resolved to pass 2017 internal audit system statement. 5. It is resolved to pass to hold 2018 shareholders meeting. 6. It is resolved to accept 2018 shareholder’s proposal of shareholders meeting. 7. It is resolved that the Company increase capital CNY 267,520,000 in the third area business, British Virgin Islands Land and Sea Capital Corp., and through this company to set up Zhangzhou Chimei Chemical Company Limited to joint venture and build ABS factory with annual manufacture capacity 450,000 tons. 8. It is resolved to investment private equity fund CDIB CAPITAL GLOBAL OPPORTUNITIES FUND US$30 million through the Company 100% reinvested subsidiary,GOLDENPACIFIC EQUITIES LTD..
Date of board of director	13 April, 2018	1. It is resolved to reelect the chairman of the Company. 2. It is resolved to amend the “article of incorporation.”
Date of board of director	10 May, 2018	1. Report of the first quarter financial statements of 2018. 2. It is resolved to pass the job adjustment of high-level mangers. 3. It is resolved to modifythe Company’s organization chart.
Date of board of director	9 August, 2018	1. Report of the second quarter financial statements of 2018. 2. Report of the director and manager liability insurance. 3. It is resolved to pass 2017 managers and directors’ remuneration. 4. It is resolved to change the shareholder service agent. 5. It is resolved to amend “Rules and Procedures of Board of Directors”
Date of board of director	9 October, 2018	1. It is resolved that the Company increase capital CNY 279,680,000 in the third area business, Land & Sea Capital Corp., and through this company to reinvest Zhangzhou Chimei Chemical Company Limited to joint venture and build PC and PETG factory.

		2. It is resolved that the Company through its subsidiary, GPPC Investment Co., Ltd.,to reinvest the domestic food and beverage business.
Date of board of director	9 November, 2018	1. Report of the third quarter financial statements of 2018. 2. It is resolved to pass 2019 annual internal audit plan. 3. It is resolved to build hazardous waste handling facility through the capital increase bycash of ZhenjiangChimei Chemical CompanyLimited.
Date of board of director	23 January, 2019	1. It is resolved to engage Crowe (TW) CPAs to perform the audit and review and independent evaluation of 2019 financial statements 2. It is resolved topass 2019 business budget.
Date of board of director	21 March, 2019	1. It is resolved to pass 2018 employees and directors’ remuneration. 2. It is resolved to pass 2018 individual financial statements and consolidated financial statements. 3. It is resolved to pass 2018 internal audit system statement. 4. It is resolved to pass to hold 2019 shareholders meeting. 5. It is resolved to accept 2019 shareholder’s proposal of shareholders meeting. 6. It is resolved to amend “Guidelines for Handling Acquisition and Disposal of Assets by the Company” 7. It is resolved to amend “Rule and Procedure of Lending of Money by the Company” 8. It is resolved to amend “Rules and Procedures of Endorsement and Warranty by the Company” 9. It is resolved to increase capital to Land & Sea Capital Corp. by cash and then through the company to reinvest Zhangzhou Chimei Chemical Company Limited. to joint venture and build ABS factory. Others funds will be paid by earnings of Zhenjiang Chimei Chemical Company Limited. 10. It is resolved to discharge the non-competition obligation of directors. 11. It is resolved to discharge the non-competition obligation of mangers

2. The content and implementation of material resolution in 2017 shareholders

meeting:

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Item The resolution of shareholders meeting
2017 business report
1 Implementation: The 2017 net sales revenue of the Company is NT$18,931,639,000 and the profit
after tax is NT$3,288,642,000.
2 The audit committee inspected 2017 annual final accounting books and statements.
3 The distribution of 217 employees and directors’ remuneration.
4 It is resolved to acknowledge 2017 annual final accounting books and statements
It is resolved to acknowledge 2017 earnings distribution.
Implementation: 1. Cash dividends of common stock NT$ 906,620,328 and dividends per share I
sNT$1.0.Cash dividends of preferred stocks is NT$32,000,000 and dividends per
5
share I sNT$1.6.
2. It is resolved that the record date of cash dividends is 22 July, 2018 and the
distribution date is 15 August, 2018.
It is resolved to amend the “article of incorporation.”
5
Implementation: The MOEA registration has completed on 31 July, 2018.
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(XII) Where, during the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report, a director or supervisor has expressed a dissenting opinion with respect to a material resolution passed by the board of directors, and said dissenting opinion has been recorded or prepared as a written declaration, disclose the principal content thereof: None.

(XIII) A summary of resignations and dismissals, during the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report, of the company’s chairman, general manager, principal accounting officer, principal financial officer, chief internal auditor, and principal research and development officer:

Summary of resignation of Company’s related person.

				16 April,2019
Position	Name	On board date	Resignation date	Reason of resignation or dismissal
Chairman	WU,CHUN-TAI	30 July, 2012	15 April, 2018	Retirement

Note: The related person means chairman, general manger, chief accounting officer, chief financial officer, principal of internal audit and principal of research and development, etc.

V. Information on CPA professional fees:

When non-audit fees paid to the certified public accountant, to the accounting firm of the certified public accountant, and/or to any affiliated enterprise of such accounting firm are one quarter or more of the audit fees paid thereto, the amounts of both audit and non-audit fees as well as details of non-audit services shall be disclosed:

The range of CPA professional fees

The name of accountant firm	The name of accountant	The name of accountant	Audit period	Note
Crowe (TW) CPAs	HSIAO,YING-CHIA	WANG,WU-CHANG	1 January, 2018 to 12 December, 2018

Amount unit: New Taiwan Thousand Dollar

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Item of fees
Audit fees Non-audit fees Sum
Amount range
1 below 2 million
2 2 million (including) to 4 million 2,950,000 100,000 3,050,000
3 4 million (including) to 6 million
4 6 million (including) to 8 million
5 8 million (including) to 10 million
5 More than 10 million (including)
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Amount unit: New Taiwan Thousand Dollar

				Non-audit fees	Non-audit fees	Non-audit fees
The name of accountant firm	The name of accountant	Audit fees	System design	Business registration	Human resource	CPA Audit period Others (Note 2) Sum	Note
Crowe (TW) CPAs	HSIAO,YING- CHIA	2,950,000	0	0	0	100,000 100,000 1 January, 2018 to 12 December, 2018	The audit fee of investment financial status brief table NT$100,000.
	WANG,WU-C HANG

Note 1: In this fiscal year, if the Company change accountant or accountant firm, it should disclose audit period and change reason in note column and should also disclose paid audit and non-audit fees in order.

Note 2: Non-audit fee should disclosed by service item. If the others section of the non-audit fees accounts more than 25% of the non-audit fees, it should disclose service content in note column.

When the company changes its accounting firm and the audit fees paid for the fiscal year in which such change took place are lower than those for the previous fiscal year, the amounts of the audit fees before and after the change and the reasons shall be disclosed: Not applicable.
When the audit fees paid for the current fiscal year are lower than those for the previous fiscal year by 15 percent or more, the reduction in the amount of audit fees, reduction percentage, and reason(s) therefor shall be disclosed: Not applicable.

IV. Information on replacement of certified public accountant: None.

VII. Where the company’s chairperson, general manager, or any managerial officer in charge of finance or accounting matters has in the most recent year held a position at the accounting firm of its certified public accountant or at an affiliated enterprise of such accounting firm: None.

VIII. Any transfer of equity interests and/or pledge of or change in equity interests by a director, supervisor, managerial officer, or shareholder with a stake of more than 10 percent during the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report:

(I) The shareholding changes of common stock

the shareholding changes of directors, mangers and major shareholders (common stock)

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2018 As of 16 April, 2019
Pledged shares
Shares Shares Pledged shares
number
(1) Position Name Increase Increase number
Increase
(decrease) (decrease) Increase (decrease)
(decrease)
number number number
number
YANG,PIN-C
Representative of Jing
HENG
Chairman Kwan Investment Co., (100,000) (5,000,000) 0 0
(On board date: 15
Ltd.
April, 2018)
Chairman WU,CHUN-TAI (Resignation date:
0 0 0 0
(retired) 15 April 2018)
HUANG,HSI-
Representative of
HUI
Director Zhong Kwan 0 0 0 0
(On board date: 25
June, 2014) Investment Co., Ltd.
TIEN,CHEN-
CHING
Director
(On board date: 25 Representative of Lai
June, 2014) Fu Investment
0 0 0 0
TSENG,CHIA Limited
-HSIUNG
Director
(On board date: 15
April, 2018)
Independent SHIH,KUANG-HSUN (On board
0 0 0 0
director date: 25 June, 2014)
Independent CHEN,SUNG-TUNG (On board
0 0 0 0
director date: 25 June, 2014)
Independent CHEN,WEN-TSUNG (On board
0 0 0 0
director date: 25 June, 2014)
Senior vice HUANG,HSI-HUI (On board date:
0 0 0 0
president 16 April, 2003)
Senior vice CHOU,CHEN-MING (On board
0 0 0 0
president date: 1 March, 2011)
Senior vice TSENG,CHIA-HSIUNG (On board
0 0 0 0
president date: 1 February, 2017)
General LIANG,JEN-CHIEH (On board date:
0 0 0 0
manager 1 March, 2011)
Tsao, Fu Hua (On board date: 1
Vice president 0 0 0 0
February, 2017)
LIN,WEN-HUI (On board date: 1
Vice president 0 0 0 0
February, 2019)
Chief of
CHEN,CHING-FU (On board date: 1
financial 0 0 0 0
January, 2009)
department
Chief of
CHEN,LING-CHU (On board date: 1
accounting 0 0 0 0
January, 2009)
department
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(II) The shareholding changes of preferred stock

the shareholding changes of directors, mangers and major shareholders (preferred stock)

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2018 As of 16 April, 2019
Pledged shares Pledged shares
Increase Increase
(1) Position Name increase increase
(decrease) (decrease)
(decrease) (decrease)
number number
number number
YANG,PIN-C Representative of Jing
HENG
Chairman Kwan Investment Co., 0 0 0 0
(On board date: 15
April, 2018) Ltd.
Chairman WU,CHUN-TAI (Resignation date: 15
0 0 0 0
(retired) April 2018)
HUANG,HSI- Representative of
HUI
Director Zhong Kwan 0 0 0 0
(On board date: 25
June, 2014) Investment Co., Ltd.
TIEN,CHEN-
CHING
Director
(On board date: 25
Representative of Lai
June, 2014)
Fu Investment Limited 0 0 0 0
TSENG,CHIA
-HSIUNG
Director
(On board date: 15
April, 2018)
Independent SHIH,KUANG-HSUN (On board
0 0 0 0
director date: 25 June, 2014)
Independent CHEN,SUNG-TUNG (On board date:
0 0 0 0
director 25 June, 2014)
Independent CHEN,WEN-TSUNG (On board date:
0 0 0 0
director 25 June, 2014)
Senior vice HUANG,HSI-HUI (On board date: 16
0 0 0 0
president April, 2003)
Senior vice CHOU,CHEN-MING (On board date:
0 0 0 0
president 1 March, 2011)
Senior vice TSENG,CHIA-HSIUNG (On board
0 0 0 0
president date: 1 February, 2017)
General LIANG,JEN-CHIEH (On board date:
0 0 0 0
manager 1 March, 2011)
Tsao, Fu Hua (On board date: 1
Vice president 0 0 0 0
February, 2017)
LIN,WEN-HUI (On board date: 1
Vice president 0 0 0 0
February, 2019)
Chief of
CHEN,CHING-FU (On board date: 1
financial 0 0 0 0
January, 2009)
department
Chief of
CHEN,LING-CHU (On board date: 1
accounting 0 0 0 0
January, 2009)
department
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(III) Where the counterparty in any such transfer or pledge of equity interests is a related party, disclose the counterparty’s information: None.

IX. Relationship information, if among the company’s 10 largest shareholders any one is a related party or a relative within the second degree of kinship of another:

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Company name,
name and its
relationship
information, if
among the
company’s 10
Shares held The share
The shares held by largest
by spouse held by
him/herself shareholders any
and minors nominees
one is a related
party or a relative
Name (Note 1)
within the second
degree of kinship
of another. (Note
3)
KGI Securities Co., Ltd. 67,411,690 7.28% 0 0 0 0 －－
Representative: HSU,TAO-YI 0 0
Fubon Life Insurance Co., Ltd. 64,767,000 6.99% 0 0 0 0 －－
Representative: TSAI,MING-HSING 0 0
Cathy Life Insurance Co., Ltd. 45,450,600 4.90% 0 0 0 0 －－
Representative: TSAI,HUNG-TU 0 0
China Life Insurance Company Limited 43,571,000 4.70% 0 0 0 0 －－
Representative: WANG,MING-YANG 0 0
Chung Kwan Investment Co., Ltd. 28,262,722 3.05% 0 0 0 0 －－
Representative: YEH,CHE-CHENG 0 0
Jing Kwan Investment Co., Ltd. 20,280,000 2.19% 0 0 0 0 －－
Representative: WU,CHUN-TAI 241 0
Citigroup (Taiwan) Custody- Norges 18,754,000 2.02% 0 0 0 0 －－
Bank
JPMorgan Chase Bank, N.A., Taipei
Branch in Custody for Stichting 17,546,000 1.89% 0 0 0 0 －－
Pensioenfonds ABP
Vanguard Total International Stock
Index Fund, A Series of Vanguard Star 13,910,000 1.50% 0 0 0 0 －－
Funds
Vanguard Emerging Market Stock
Index Fund, Series of Vanguard 13,772,394 1.49% 0 0 0 0 －－
International Equity Index Funds
Note
Name
Shares Shares Shares
percentage percentage percentage Relationship
Shareholding Shareholding Shareholding
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Note 1: All of the top 10 shareholders should be listed and the shareholder is juristic person, its name and the name of its representative should be listed separately.

Note 2: The calculation of shareholding ratio means the shares held by him/herself, spouse, minors or nominees.

Note 3: The above listed shareholder includes juristic person and natural person and it should disclose relationship among them in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers.

X. The total number of shares and total equity stake held in any single enterprise by the company, its directors and supervisors, managers, and any companies controlled either directly or indirectly by the company:

16 April, 2019 / Unit: Thousand shares; %

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Directors, mangers and
The Company’s directly or indirectly Comprehensive
Reinvested entity investment controlled investment investment
(Note) entity
Shareholding Shareholding Shareholding
Shares Shares Shares
ratio ratio ratio
GPPC CHEMICAL
54,200 100.00 0 0 54,200 100.00
CORPORATION
GPPC Investment Corp. 22,032 81.60 4,968 18.40 27,000 100.00
GPPC Hospitality and Leisure
4,000 100.00 0 0 4,000 100.00
Inc
Videoland Inc. 71,093 62.29 0 0 71,093 62.29
KK ENTERPRISE CO., LTD. 9,918 15.73 21,307 33.79 31,225 49.52
GOLDENPACIFIC EQUITIES
75 100.00 0 0 75 100.00
LTD.
Land & Sea Capital Corp. 60,898 100.00 0 0 60,898 100.00
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Note: The long term investment evaluation by equity method.

Four. Information on capital raising activities

I. Capital and shares

(I) Source of share capital

Unit: Share; New Taiwan Dollar

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Authorized capital Paid-in capital Note
Share
payments
Year Issuance
Share are offset by
Month price Share number value value The source of capital Others
number other
property
than cash.
The initial capital is
NT$180,000,000.
September, The capital increase by
1973 10 18,000,000 180,000,000 4,500,000 45,000,000 cash is NT$940,000,000.
to to to ∫ to Capital elimination None －
August, 10 603,840,309 6,038,403,090 603,840,309 6,038,403,090 1,007,771,220 shares
1996 Capital increase
5,926,174,310 shares by
retained earnings
Capital increase (1997) Tai Cai
September,
10 621,955,519 6,219,555,190 621,955,519 6,219,555,190 181,152,100 shares by None Zheng
1997
retained earnings. (I) No. 52377
8 July, 1998
Capital increase
August, (1998) Tai Cai
10 634,394,629 6,343,946,290 634,394,629 6,343,946,290 124,391,100 shares by None
1998 Zheng
retained earnings (I) No. 59018
7 July, 2000
Capital increase
August, (2000) Tai Cai
10 647,082,522 6,470,825,220 647,082,522 6,470,825,220 126,878,930 shares by None
2000 Zheng
retained earnings
(I) No. 58945
10 July, 2011
Capital increase
August, (2001) Tai Cai
10 659,824,173 6,598,241,730 659,824,173 6,598,241,730 127,416,510 shares by None
2001 Zheng
retained earnings (I) No. 144527
6 August, 2002
August, 10 1,000,000,000 10,000,000,000 659,824,173 6,598,241,730 － None Jing Shou Shang Zi
2002
No. 09101319150
29 October, 2007
October Jing Shou Shang Zi
10 1,000,000,000 10,000,000,000 660,974,964 6,609.749,640 [Convert 1,150,791 shares ] None
2007 from corporate bonds No.
09601265240
7 March, 2008
Jing Shou Shang Zi
May, 2008 10 1,000,000,000 10,000,000,000 732,689,057 7,326,890,570 [Convert 71,714,093 shares ] None
from corporate bonds No.
No. 09701106620
17 September, 2008
September, Jing Shou Shang Zi
10 1,000,000,000 10,000,000,000 733,482,707 7,334,827,070 [Convert 793,650 shares ] None
2008 from corporate bonds No.
No. 09701238390
28 September, 2009
September, Jing Shou Shang Zi
10 1,000,000,000 10,000,000,000 813,828,844 8,138,288,440 [Convert 80,346,137 shares ] None
2009 from corporate bonds No.
No. 09801223320
17 December, 2009
December, Jing Shou Shang Zi
10 1,000,000,000 10,000,000,000 880,670,078 8,806,700,780 [Convert 66,841,234 shares ] None
2009 from corporate bonds No.
No. 09801287180
28 January, 2010
Convert 45,950,250
January, Jing Shou Shang
10 1,000,000,000 10,000,000,000 926,620,328 9,266,203,280 shares from corporate None
2010 Zi No.
bonds
No. 09901020660
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Unit: Share

	Unit: Share	Unit: Share	Unit: Share	Unit: Share	Unit: Share	Unit: Share
The type of shares	Authorized capital Note Outstandingshares Unissued shares Sum listed unlisted Sum
Common stock	906,620,328 906,620,328 906,620,328 `－`
Preferred shares	20,000,000	`－`	20,000,000	`－`	20,000,000	`－`

If approval has been granted to offer and issue securities by shelf registration, additionally disclose the approved amount and information regarding securities to be issued or already issued: None.

(II) Structure of Shareholders

1. Common stock

16 April, 2019

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

Shareholder
Foreign
structure Financial other juristic
Government institution Individual Sum
institution person
and person
Amount
Total
shareholder 0 13 162 328 71,819 72,322
number
The holding
0 167,948,600 163,019,884 353,887,784 221,764,060 906,620,328
share number
Shareholding
0.00% 18.52% 17.98% 39.03% 24.46% 100.00%
structure
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2. Preferred stock

16 April, 2019

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

Shareholder
structure Foreign
Financial other juristic
Government institution Individual Sum
institution person
and person
Amount
Total
shareholder 0 0 13 3 1,445 1,461
number
The holding
0 0 4,572,000 43,334 15,384,666 20,000,000
share number
Shareholding
0.00% 0.00% 22.86% 0.22% 76.92% 100.00%
structure
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(III) Distribution of Equity Interests Diffusion of ownership

1. Common stock

Par value per share is NT$10, 16 April, 2019

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Shares holding range [The shareholders ] Shares Shareholding ratio
number
1-999 41,949 5,666,376 0.62%
1,000-5,000 22,555 49,518,272 5.46%
5,001-10,000 4,100 32,820,786 3.62%
10,001-15,000 1,041 13,166,345 1.45%
15,001-20,000 821 15,472,390 1.71%
20,001-30,000 590 15,256,875 1.68%
30,001-40,000 248 9,035,446 1.00%
40,001-50,000 199 9,416,850 1.04%
50,001-100,000 355 26,108,931 2.88%
100,001-200,000 173 26,298,298 2.90%
200,001-400,000 100 29,158,727 3.22%
400,001-600,000 41 19,250,389 2.12%
600,001-800,000 33 23,180,000 2.56%
800,001-1,000,000 23 21,044,301 2.32%
More thatn 1,000,00 94 611,226,342 67.42%
Sum 72,322 906,620,328 100.00%
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2. Preferred stock

Par value per share is NT$10, 16 April, 2019

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

The
Shares holding range shareholders Shares Shareholding ratio
number
1-999 10 3,083 0.02%
1,000-5,000 1,182 2,187,917 10.94%
5,001-10,000 116 929,000 4.65%
10,001-15,000 52 672,000 3.36%
15,001-20,000 16 302,000 1.51%
20,001-30,000 25 652,000 3.26%
30,001-40,000 12 418,000 2.09%
40,001-50,000 7 335,000 1.68%
50,001-100,000 18 1,435,000 7.18%
100,001-200,000 9 1,216,000 6.08%
200,001-400,000 4 983,000 4.92%
400,001-600,000 3 1,426,000 7.13%
600,001-800,000 2 1,320,000 6.60%
800,001-1,000,000 2 1,827,000 9.14%
More thatn 1,000,00 3 6,294,000 31.47%
Sum 1,461 20,000,000 100.00%
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(IV) List of major shareholders: List all shareholders with a stake of 5 percent or greater, or the names of the top ten shareholders.

(IV) List of major shareholders: List all shareholders with a stake of 5 percent or greater, or the names of the top ten shareholders.	(IV) List of major shareholders: List all shareholders with a stake of 5 percent or greater, or the names of the top ten shareholders.	(IV) List of major shareholders: List all shareholders with a stake of 5 percent or greater, or the names of the top ten shareholders.	(IV) List of major shareholders: List all shareholders with a stake of 5 percent or greater, or the names of the top ten shareholders.
Common shares 16 Aril,2019
Item Name of major shareholders Shares Shareholding ratio
1 KGI Securities Co.,Ltd. 67,411,690 7.44%
2 Fubon Life Insurance Co.,Ltd. 64,767,000 7.14%
3 CathyLife Insurance Co.,Ltd. 45,450,600 5.01%
4 China Life Insurance CompanyLimited 43,571,000 4.81%
5 ChungKwan Investment Co.,Ltd. 28,262,722 3.12%
5 JingKwan Investment Co.,Ltd. 20,280,000 2.24%
7 Citigroup (Taiwan)Custody- Norges Bank 18,754,000 2.07%
8 JPMorgan Chase Bank, N.A., Taipei Branch in Custody for Stichting Pensioenfonds ABP 17,546,000 1.94%
9 Vanguard Total International Stock Index Fund, A Series of Vanguard Star Funds 13,910,000 1.53%
10	Vanguard Emerging Market Stock Index Fund, Series of Vanguard International Equity Index Funds	13,772,394	1.52%

==> picture [471 x 190] intentionally omitted <==

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

(Preferred stock) 16 April, 2019
Item Name of major shareholders Shares Shareholding ratio
1 LIN,JUI-HUI 2,505,000 12.53%
2 Taishin Securities Co., Ltd. 2,013,000 10.07%
3 GPPC Chemical Corporation 1,776,000 8.88%
4 Qiu Chuang Quan 968,000 4.84%
5 LIN,SHAN-LUNG 859,000 4.30%
5 Qiu Qi Xin 670,000 3.35%
7 HUANG,CHIN-CHUAN 650,000 3.25%
8 HUNG,CHIEN-MEI 540,000 2.70%
9 Hungkuang University 476,000 2.38%
10 Qiu Qi Min 410,000 2.05%
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(V) Information of market value, net value, earnings and dividends per share

Unit: Dollar / share

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

Year
2017 2018
Item
The market The maximum 33.35 35.15
price per The minimum 18.60 19.45
share
Average 22.91 28.15
(Note 1)
The net value
Before distribution NT$22.48 NT$ 24.59
per share
(Note 2) After distribution NT$ 21.46
Weighted average stock
Earnings per 900,971,000 shares 905,338, 000 shares
number
share
Earnings per share (Note 3) NT$3.64 NT$3.26
Cash dividends 1.0 0
Stock dividends
Stock
distirbuiton from 0 0
Earnings per dividend
share retained earnings
distribution
capital reserved 0 0
Accumulated unpaid stock
0 0
dividends
The analysis P/E ratio (Note 5) 6.29 8.63
of
investment P/ Ratio (Note 6) 22.91 0
return rate Cash dividend yield (Note 7) 0.044 0
----- End of picture text -----*

If there is capital increase by earnings or capital reserve, it should have disclosed the
retroactively adjusted market price and cash dividends in according to the distribution shares number.
Note 1: List the annual maximum and minimum market price of common stock and calculate each year average market price in accordance to annual transaction volume.
Note 2: Please fill in according to the issued shares number in the end of the year and the distribution resolution of next year’s shareholders meeting.
Note 3: If there is any retroactively adjustment due to free-of-charge stock distribution, it should list earnings per share before and after adjustment.
Note 4: If the issuance condition of equity securities includes the terms that the unpaid stock dividends of the fiscal year can be aggregated to distribute when there is earnings, it should disclose the un-pay stock dividends.
Note 5: Price-to-earnings ratio = the average closing price in the fiscal year / earnings per share.
Note 6: Price to dividend ratio = the average closing price in the fiscal year / cash dividend per share.
Note 7: Dividend yield = cash dividend per share / the average closing price in the fiscal year
Note 8: The net worth per share, the earning per share should fill in the latest CPA audited(reviewed) information as of the publication of this annual report; other column should fill the information of the fiscal year as of the publication date of this annual report.

(VI) Dividend Policy and Execution:

1. The dividends policy of the Company’s article of incorporation:

Article 29 The Company should distribute 1% of the profit of that fiscal year as employee compensation and should distribute no less than 2% if the profit of that fiscal year. However, if there is accumulated deficit, it should be covered.

The profitability for the current year as indicated in the preceding paragraph refers to the profits before remunerations assigned to employees and directors and supervisors are subtracted from pre-tax profits for the current year.

If there is earning after closing, after paying the tax, cover the accumulated deficit, distribute 10% legal surplus, and distribute the minus item of shareholders’ equity or reverse special reserve, and there is distributable earnings of this fiscal year, it and the retained earnings of last fiscal year together is retained distributable earnings. If should distribute 6% preferred stock dividends, and if there is any unpaid preferred stock dividends in each year, the deficit should be covered priority in the year with distributable earnings.

The remaining earnings yet to be distributed are to be distributed after the Board of Directors has stipulated the distribution proposal according to regulatory requirements, the dividend policy, and funding status, among others, and submitted it to and have it approved through the shareholders’ meeting.

The industrial environment that the Company is in is changeable and the corporate life cycle is at the steady growth phase, the economic settings will be kept track of in order to realize sustainable management. In order to consider the Company’s long-term financial planning, future funding needs and safeguard the interests of shareholders. The cash dividends should not lower than 10% of total cash and stock dividends of the year (excluding the 6%, preferred stock dividends)

2. Implementation status

The resolution to pass 2018 earnings distribution on 25 April, 2019 is as below:

(1) The Company’s 2018 profit after tax is NT$2,960,106,175,

after less legal reserve NT$296,010,618, the total distributable earnings is NT$2,664,095,557. After add 2018 IFRS retroactive application and restatement number NT$42,398,436 and reassessment number of confirmed benefit plan NT$5,512,004, the undistributed earnings at the beginning of the year NT$6,512,806,041. The total distributable retained earnings is NT$9,176,901,598.

According to Article 29 of the article of incorporation, the preferred stocked dividends NT$12 million should be priority of distribution, then the distributable earnings is NT$9,164,901,598. It is proposed not to distribute cash dividends to common stock and after distribution, the balance of retained earnings is NT$9,164,901,598.
Expected major change in dividends policy: None.

(VII) Effect upon business performance and earnings per share of any stock dividend distribution proposed or adopted at the most recent shareholders’ meeting:Not applicable.
(VIII) Compensation of employees, and directors
(1) The percentages or ranges with respect to employee, and director compensation, as set forth in the company’s articles of incorporation:
- Please refer to Section (6)-1 of page 48, dividends policy prescribed in article of incorporation.
The basis for estimating the amount of employee, and director compensation, for calculating the number of shares to be distributed as employee compensation, and the accounting treatment of the discrepancy, if any, between the actual distributed amount and the estimated figure, for the current period:
- (1) The basis for estimating the amount of employee, and director compensation: The estimation is in according to quarter performance.
- (2) The basis for calculating the number of shares to be distributed as employee compensation: Not applicable. The Company does not distribute stock dividends.
- (3) The accounting treatment of the discrepancy, if any, between the actual distributed amount and the estimated figure: If there is any discrepancy between the actual distributed amount and the estimated figure, it is deemed as accounting estimation change and would be treated as annual income/loss of shareholders meeting resolution.
Information on any approval by the board of directors of distribution of compensation:
- (1) On 21 March, 2019, the Company’s board of directors has resolved to distribute:
  - ●Employees’ compensation – distribute NT$ 37,477,905
  - ●Directors’ compensation – distribute NT$74,955,811.
  - If there is any discrepancy between that amount and the estimated figure for the fiscal year these expenses are recognized, the discrepancy, its cause, and the status of treatment shall be disclosed: There is no discrepancy. Not applicable.

  - (3) The proposed distribute employees stock dividends and its ratio to profit after tax and the aggregate amount of employees’ bonus: Not applicable.

  - (4) The earnings per share after consideration of the proposed employees and directors’ compensation: After calculation, the basic earnings per share is NT$3.26.

The actual distribution of employee, director, and supervisor compensation for the previous fiscal year (with an indication of the number of shares, monetary amount, and stock price, of the shares distributed), and, if there is any discrepancy between the actual distribution and the recognized employee, director, or supervisor compensation, additionally the discrepancy, cause, and how it is treated:
- The shareholders meeting has resolved to pass 2017 earnings distribution on 15 June, 2018. The relevant board of directors’ resolution is as below:
- (1) Distribute employees’ compensation: NT$38,900,267.
- (2) Distribute directors’ compensation: NT$ 77,800,534.
- There is no discrepancy between the proposed distribution amount the estimate amount.
(IX) Share repurchases: None.

II. Corporate bonds: The Company does not issue corporate bonds.

III. Preferred stock:

Unit: New Taiwan dollar

==> picture [430 x 666] intentionally omitted <==

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

Issuance date
August, 1984
Item
Par value 10
Issuance price 10
Shares number 20,000,000 shares
Sum NT$ 200,000,000
If there are earnings after accounts closed,
Distribution of dividends it should priority distribute preferred stock
and bonus dividends 6%, then the remaining is the
same as common stock.
The distribution of
Priority of distribution of residual assets
residual assets.
The enforcement of voting
The same as common stock
right
Others -
repurchase or
converted number -
Outstanding The balance number
preferred of not purchased or -
stock converted.
Repurchase and
conversion clause -
The maximum 26.50
2016 The minimum 21.25
Average 23.54
The maximum 34.50
The 2017 The minimum 24.50
market
Average 28.09
price
The maximum 36.90
per
share 2018 The minimum 30.55
Average 34.49
This fiscal The maximum 36.45
year as of The minimum 34.20
31 March,
2019 Average 35.42
Transferred or subscribed
amount aAs of the
0
With publication of this annual
other report
rights Rules and Procedures of
Issuance and conversion -
or subscription
The impact of issuance condition on
the preferred stock shareholders and
the possible dilution of shareholder None
equity and impact on the rights of the
original shareholders
matters
rights and obligation
Priority of distribution of
----- End of picture text -----

IV. The section on global depository receipts: None.
V. The section on employee share subscription warrants: None.

IV. The section on new restricted employee shares: None.

VII. The section on issuance of new shares in connection with mergers or acquisitions or with acquisitions of shares of other companies: None

VIII. The section on implementation of the company’s capital allocation plans: None.

Five. Business Overall

I. The content of business:

(I) Business Scope
The main businesses
(1) C801020 Basic Industrial Chemical Manufacturing
(2) C801100 Synthetic Resin & Plastic Manufacturing
(3) C802990 Other Chemical Products Manufacturing
(4) F401010 International Trade
(5) D401010 Heat Energy Supplying
(6) D401010 Heat Energy Supplying
(7) G801010 Warehousing and Storage
(8) H701020 Industrial Factory Buildings Lease Construction and Development
(9) F501060 Restaurants
(10)ZZ99999 All business items that are not prohibited or restricted by law, except those that are subject to special approval
(11)J506021 Satellite Broadcasting Television Program Supplier
(12)J503021 Television Production
(13)J50303Broadcasting and Television Program Distribution
(14)J401011 Motion Picture Production
(15)J402011 Motion Picture Distribution
(16)J503011 Broadcasting Production
(17)J503041 Broadcasting and Television Commercial
(18)J503051 Video Program Distribution
(19)F401021 Restrained Telecom Radio Frequency Equipments and Materials Import
(20)E701020 Channel KU and C of Satellite TV Equipments and Materials Construction
(21)E701030 Restrained Telecom Radio Frequency Equipments and Materials Construction
(22)I103060 Management Consulting Services
(23)I401010 General Advertising Services
(24)JB01010 Exhibition Services
(25)J602010 Agents and Managers for Performing Arts, Entertainers, and Models
(26)J803020 Athletics Racing

2. The business ratio of each product:

(1) GPPC group

Unit: New Taiwan thousand dollars; %

==> picture [419 x 139] intentionally omitted <==

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

Main products 2018 sales revenues Sales ratio
Petrochemical sales revenue 10,623,421 42.94﹪
Plastic sales revenue (ABS, HIPS) 6,801,480 27.49﹪
Advertising, video and channel
2,024,664 8.18%
operating income
Package sales revenue 1,775,236 7.18%
Nylon sales revenue 2,682,897 10.84%
Others (Note) 833,440 3.37﹪
Sum 24,741,138 100﹪
----- End of picture text -----

Note: Others includes sales revenues from steam and electricity, copyright and broadcast. Because all of the above accounts below 5% of total sales revenues, they are listed in aggregated number.

(2) The Company’s individual financial statements.

Unit: New Taiwan thousand dollars; %

==> picture [419 x 110] intentionally omitted <==

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

Main products 2018 sales revenues Sales ratio
SM 11,726,280 57.75﹪
ABS 5,337,138 26.29﹪
H2 131,383 0.65﹪
Steam and electricity 427,396 2.10%
Nylon 2,682,897 13.21%
Sum 20,305,094 100﹪
----- End of picture text -----

3. The current product(service) of GPPC group:

(1) Manufacture and sales of styrene monomer (SM) and related derivatives and by-products (toluene, hydrogen, etc.).
(2) Production and sales of acrylonitrile-butadiene-styrene copolymer resin (abbreviated as ABS).
(3) Production and sales of hydrogen (H2).
(4) Steam and electricity.
(5) Nylon (PA).

(6)

(6)
Business item	Business content	Major customers	Progress
Advertising business	Sell the satellite channel advertising time operated by Videoland Television Network Co., Ltd., to the advertiser or advertising agency	Advertising agency advertiser or advertising agency	Current sales revenue is leading among cable TV channel operators
License and sub-license of copyright	Use all kinds of programs and agents of sports, drama and entertainment of Videoland Television Network Co., Ltd., or purchases the license of programs of other companies or sublicense others to broadcast or release	Domestic and foreign TV stations Platform channel dealer Copyright dealer Agency company Home audio and video product distributor	Continuous license

Continue to develop new product (service)

 - (1) Expand market of 60P basic powder and SAN commercial-grade. In response to the development of battery-level slot for smart cars, it is now optimized for current uninterruptible power systems and battery cells.

 - (2) PBL rubber agglomerated large particle latex, optimize ABS quality, develop electroplating, tube and flame resistant grade ABS and sell it to domestic and foreign customers.

 - (3) Expand the nylon industrial yarn market and maintain the quality, develop high-temperature nylon and engineering plastic products: Such as super tough, medium tough, high temperature, soft, water transparent, and blended with PPO glue.

 - (4) Actively integrate resources and establish a platform. Repackage each channel and open new opportunities through the concept of brand marketing.

 - (5) Understand the social ecosystem transformation affected by the development of new digital technologies. Deepen the brand characteristics and by increasing the activities of interactive opportunities to build audience trust.

 - (6) Strengthen parallel or vertical strategic alliances and reinvested investment business.

 - (7) The two sides of the strait have close interactions, the Company continue to develop domestic acceptance of Mainland China programs, and actively carries out cross-strait media cooperation.

 - (8) Actively expand and cooperate with website resources and develop cross-industry alliance to develop the market.

 - (9) Develop entertainment resources and manage high-value audiences.

 - (10) Accumulate experience in the Mainland China and seize the opportunities for the future market.

(II) Industry overview:
1. Current status and development of the industry

The most upstream of the petrochemical industry is crude oil, and the next one is natural gas and coal. Since crude oil has energy, financial and geopolitical attributes and its price volatility is affected by multiple factors. In 2008, the price raised exceeding US$ 140 per barrel. There have been several fluctuations and in 2016 the price per barrel went down to US$ 30. Since 2016, it has basically shown a slow rise, and overall it has returned to a price with certain level. With the slow recovery of the world economy, the petrochemical industry has been able to maintain a certain profit in recent years. Petrochemical raw materials, sourced from coal raw materials, were vigorously promoted in Mainland China during periods of high oil prices, but their development was constrained by factors such as oil

price reversal and water resources. Natural gas is another feedstock of petrochemical upstream raw materials. With the rise and maturity of shale oil and gas in the United States, beside China, it will be one of the concentration areas of foreign petrochemical capacity growth in recent years.

The Company’s main products are styrene, ABS and nylon 66 plastic and its downstream applications cover major petrochemical industries such as plastics, rubber and fiber and the scope of further downstream industries is even broader, including electronics, home appliances, automobiles, building materials, textiles, packaging, and all kinds of important industries. It has a very important pillar for economic development.

Styrene is a large circulating petrochemical raw material. It is liquid at normal temperature and very convenient for transportation. Therefore, except affected by short-term factors in various regions, the price difference of styrene around the world is mainly affected by transportation conditions and tariffs. The main raw materials for styrene are ethylene and benzene. The proportion of benzene is about 80%. Ethylene is a gas at normal temperature and pressure and the transportation expenses is very high. Therefore, the construction of styrene plants usually chooses the place close to the raw material ethylene. Benzene is liquid at normal temperature and the supply source is diversified. In addition to light oil cracking plants and refineries, there are other chemical manufacturing methods or by-products of the steel industry. It is easy to obtain and transport.

Uses the three major applications of the styrene industry are polystyrene (PS), expanded polystyrene (EPS), and ABS resin. In addition to thermoplastic elastomer (TPE), styrene butadiene rubber (SBR), styrene latex (SB Latex), unsaturated polyester (UPS), and other secondary applications. The derivative use of styrene is widely used in home appliances, electronics, construction, toys, automobiles and other industries. Therefore, the ups and downs of the styrene industry are extremely sensitive to the cycle of the economy.

After years of development, there are currently three styrene manufacturers in Taiwan. The annual production and sales volume in the past three years has remained at around 2 million tons. Besideto the mainly downstream captive use portation, there are still more than 300,000 tons of import demand every year.

ABS industry is a downstream product of styrene. In addition to styrene, two additional materials, acrylonitrile and butadiene, are

required. The difference between ABS industry and styrene industry is that the product specification of ABS industry is very diversified. The manufacture should be adjusted by customers’ need. Basically, ABS use in Asia is mainly used in home appliances and electronic products. With the continuous development of 3C information products, the need for fire resistance, heat resistance and flow characteristics has also increased. With the economy growth of emerging countries and the national income level rises, the development of industries such as home appliances, electronics and automobiles will continue to increase demand for ABS.

There are four ABS plastic manufacturers in Taiwan. The annual manufacture and sales volume in the past three years has remained at around 1.3 million tons. Unlike styrene, more than 80% of them are exported. Exportation and competing markets in various countries are the normal state of the domestic ABS industry. As China’s demand for ABS accounts for more than half of global demand, the Mainland China market has become a battleground, Red Sea, market. It is also the main area for domestic ABS exportation area. However, because the US-China trade war, the sales market is accelerating to transfer to other regions such as Southeast Asia.

Responding to the government’s high value development direction, the Company firmly invests in the construction of nylon 66 plastic plant. Is the first and only manufacturer factory in Taiwan and partially eased import pressures on domestic demand. Nylon 66 is a heat resistant engineering plastic. Except for the use of traditional textiles such as clothing and carpets, the demand for high-end products such as automotive components and electronic components has developed rapidly in recent years. It has become one of the largest applications of nylon 66. With the increase in per capita income, Demand for high-end products is increasing. After the Company is put into manufacture, Nylon 66 still maintains an import volume of approximately 60,000 tons per year. That can show its growth potential.

Due to the rapid economic development of mainland China in recent years, it has become the main market for petrochemical products. The total styrene capacity is close to 10 million tons and the self-produced rate will be greatly increased in the future. Import demand also goes downwards gradually, decreasing from the biggest volume in 2017 of 3.5 million tons, by increasing its own capacity in recent year. ABS manufacture capacity is close to 4 million tons, and

still needs to import 2 million tons. To protect self-manufacture market of Nylon 66, it sets obstacles to high tariffs on anti-dumping in major producing countries including Taiwan. However, there are still 280,000 tons of imports every year.

According to IHS analysis, demand for styrene of 2019 in Northeast Asia is 185,240,000 tons. The nameplate capacity is 164,100,000 tons. It is estimated to increase 1.7% manufacture capacity this year. However, the estimated effective operation rate is 91% and therefore the actual supply increase is estimated to be 1.6% and import 3.65 million tons to cover 1.3% growth rate demand increasment within the region is still needed. In the same analysis, the global total ABS demand to styrene is around 5.27 million tons last year. It is estimated to increase 4.8% this year. At the same time, our country apparent demand (manufacture amount + importation amount – exportation amount) of styrene is 1.97 million tons last year and among them, ABS demand is 774,000 tons. It is estimated that the styrene apparent demand is 2.06 million tons this year and among them ABS demand is 849,000 tons. In sum, the demand of both styrene and ABS will increase this year.

In addition to the Mainland China market, Nylon has gradually expanded its sales market to emerging markets, such as Southeast Asia, India and the Middle East where the economic performance has gradually received attention and although the total amount is small but the growth rate is considerable in recent years. To alleviate the risk of excessive concentration of market, the Company’s plastic (ABS and nylon 66) products are gradually expanding in these emerging regions.

In February, 1962, the opening of the educational TV experimental channel opened the country’s television industry. Previously, the commercial TV stations only had wireless TV stations - Taiwan Television, China Television, Chinese Television System, and Formosa TV (in addition to non-commercial TV - Taiwan Public Television Service Foundation, a total of five). The oligopoly makes A. the signal in the remote areas is bad; B. program content does not meet the needs of the demassification audience; C. all content is comprehensive. Therefore, the community common antenna and broadcasting system industry (commonly known as the fourth TV) came into being. This also created the rise of program providers and the cable TV stations have thus won the demassification audience’s attention with the specified content.

Videoland Television Network Co., Ltd.is also a member of

channel industry. The rise of the channel (program release) industry is closely related to the announcement of the Cable TV Act (August 11, 1993). The program provider initially delivery copy tape to broadcasts system to broadcast. Therefore, there is no advertising fee except for the collection of royalties. Afterwards, the rent of satellite channel dropped significantly, programmers have changed to deliver program by satellite ensure quality (around 1995). And programmers can use the break between the shows to play advertisements; therefore, the program provider becomes a channel provider and an advertising slot provider. Advertising revenue has become one of the main sources of revenue for channel operators. Even some channel operators use advertising revenue to maintain their programs.

The satellite radio and television law was promulgated in February 1999. The law explored the international space of Taiwan communication industry and promoted the sound development of satellite broadcast television

The wireless TV digitalization is fully implemented in July, 2012. Wireless TV analog signal officially entered into history. Cable TV also be digitalized one after another and produced HD high-definition digital content.

In response to digital and network new media trends, on 20 February, 2015 Videoland channel starts to operate on China telecom MOD plate form.

In 2018 the cable TV digitization is fully implemented and the cable analog signal officially entered into history.

The correlation between the upper, middle and lower in the industry

Styrene raw materials are benzene and ethylene. The source of ethylene is mainly supplied by CPC Corporation, Taiwan. In recent years, CPC’s manufacture volume of benzene has been decreasing year by year. The Company’s imported proportion of benzene is gradually increasing. In addition to the self-produced styrene, butadiene, the raw materials of ABS, is supplied by CPC Corporation, Taiwan as well, and the acrylonitrile is supplied by Taiwan Petrochemical Development Corporation. The raw materials of nylon 66, hexamethylene diamine and adipic acid, are not produced domestically and must be imported from abroad.

Downstream of styrene still requires one or more manufacturing procedures to produce plastic pellets or rubber, so customers are more

scalable. ABS and nylon 66 are mainly in the forming or compounding industries, and the customer scale is widely diversified.

==> picture [440 x 288] intentionally omitted <==

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

Upstream Midstream Downstream
Ethylene Styrene
Benzene
3C case, vehicles, motorcycles,
Propylene Acrylonitrile Plate fittings, stationery, toy,
accessories
Butadiene
Vehicles, electronic appliance,
Nylon
Hexamethyl belts, industrial wire,
enediamine kitchenware, accessories
Adipic
acid
----- End of picture text -----

VIDEOLAND INC. is a cable channel operator and has both the production and distribution of TV programs. The structure of its industry is as follows:

==> picture [461 x 319] intentionally omitted <==

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

Upstream Midstream Downstream
Advertisers
Videoland sports
channel
Advertise agency Videoland movies
channel
Videoland Japan
channel
Outsourcing or delegating
Videoland
production unit
comprehensive
Through
channel channel
Domestic and foreign film Program Videoland drama Release
manufacturers channel
Program Or the
Videoland
copyright Company
agency entertainment Self-sale
Program provider of channel
domestic or foreign program
Channel Vidoeland fine
program channel
Channel program provider delegation
platform channel provider Cable television system operator or
----- End of picture text -----

(III) The overview of R&D:

The R&D expenses in the most recent years and as of the publication of

this annual report.

annual report.	annual report.	annual report.
Unit: New Taiwan thousand dollars;% Year R&D expenses accounting to sales revenue % 2018 30,297 0.18%
2018	30,297	0.18%

Successful developed technology and product in the latest fiscal year and

as of the publication date of this annual report.

==> picture [460 x 27] intentionally omitted <==

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

Year R&D performance
----- End of picture text -----

2018

1. Trial production of Nylon 66 composite materials and heat-resistant
super tough nylon 66.
2. Optimized development, trial production and mass production of the
core tube.
3. Optimized development, trial production and mass production of the
uninterruptible power system battery slot.
4. Optimized the trial materials of tube and electroplating grade ABS.
5. Development client trial certification of heat-resistant grade nylon
66.
6. Developed trial production of heat-resistant super tough nylon 66
composite.

(IV) Long and short term business development plan:

1. Short term plan

(1) Trial sale of high-temperature nylon and nylon industrial yarn, nylon 66 composite material and heat-resistant super-tough nylon 66, and keeps pace with mass production and quality.

(2) PBL rubber agglomeration large particle latex, improve and adjust ABS product combination and formula, reduce production cost.
(3) Focus on work safety and environmental protection, and participate in social welfare activities.
(4) Cooperate with the market positioning of each channel, expand the income of advertising business, and stabilize the growth of revenue.
(5) Strengthen the symbiotic relationship of channel system and ensure the stable income of channel authorization.
(6) Establish a copyright business and expand the program authorization niche.
(7) Use existing resources to promote projects and integrate marketing, and substantially increase project income.

Long term plan
(1) Bring into play the function of establishing a research and development center to achieve the establishment of independent technology.
(2) Accumulate research and development energy, and actively participate in cooperation and project among industry, government, and scholar.
(3) Planning nylon engineering plastic blending plant to enhance market competitive advantage.
(4) Leverage international strategic alliances, expand overseas channels, and business opportunities in program business.
(5) Increase cross-strait media industry cooperation, increase the production and broadcasting of high-quality programs in the Mainland China, and develop new markets.
(6) The digital era is coming, plans to cross the Internet TV market, apply for IPTV channel licenses, and expand brand influence and business benefits.

II. The overview of market, manufacture and sale:

(I) Market analysis:
Sales (providing) areas of major products (services)

II. The overview of market, manufacture and sale: (I) Market analysis: 1. Sales (providing) areas of major products (services)	II. The overview of market, manufacture and sale: (I) Market analysis: 1. Sales (providing) areas of major products (services)	II. The overview of market, manufacture and sale: (I) Market analysis: 1. Sales (providing) areas of major products (services)
Main products Main market distribution method
Styrene monomer (SM) Domestic Direct sale
Acrylonitrile-butadiene-styrene copolymer resin (ABS) Domestic, Mainland China, Hong Kong, the United States, South Africa, and Southeast Asia, etc. Direct sale and distribution
Hydrogen (H2) Domestic Direct sale and distribution
Steamand electricity Domestic Direct sale
Nylon 66	Domestic, Mainland China, Hong Kong, the United States, South Africa, Southeast Asia, and India,etc.	Direct sale

Videoland Television Network Co., Ltd. is a satellite TV business program provider approved by the competent authority. The main sales product revenues are satellite program video revenue and advertising revenue.

The video services are sold to cable TV operators in Taiwan, Penghu,

Kinmen and Mazu, and other public broadcasters.

The advertising business is sold to juristic person and individuals at all levels.

Market share and the status and growth of market supply and demand in the future:

The Company’s 2019 SM and ABS production capacity was 370,000 metric tons and 120,000 metric tons, respectively, accounting for 19% and 6.06% of Taiwan’s total manufacture capacity. Due to the constraints of existing industry development policies, the expansion of domestic petrochemical upstream has reached saturation. The expansion of the midstream and downstream industries have been limited. In the absence of new manufacture capacity expansion, the change in this market share is only slightly fluctuation.

After decades of development, Mainland China has become the world factory with its huge quantity and has gradually moved towards the world market. It has become the main driving source both in manufacture capacity and market size. In addition to the expansion of capacity in the United States due to the low cost raw materials of shale gas, the expansion and market growth of the general petrochemical industry in this century has mainly come from Mainland China. The rapid growth of infrastructure, real estate and automobile industries, as well as the previous policy of home appliances to the countryside, Mainland China have triggered a wave of expansion of styrene products. Due to the significant improvement in the profitability of the styrene industry in recent years, a new round of new manufacture capacity expansion is under planningor in progress. In the next five years, the self-sufficiency rate of styrene in the Mainland China will gradually increase, and the importation amount will shrink in a certain period of time. Different from the previous plan, many of the new round of investment plans have matching upstream materials. This will help to increase the average operating rate of the styrene industry, but the relative completion schedule of the huge plans is also relatively uncertain.

Although the increase in supply side may squeeze the space of existing manufacturers to a certain extent, China’s continued progress toward the world market will also provide sufficient market size. In 2019, the economic growth rate is set by 6.1%. The implementation of

the One Belt and One Road economy, the increase in per capita income, the demand for home appliances, electronics, automobiles and e-commerce packaging materials and the need of insulation will continue to grow. In addition, the development of the national economy in the south will also make the national demand gradually evolve from the PE, PVC and other basic plastics to the styrene series PS, ABS, EPS, etc. The demand growth of high-grade engineering plastics such as nylon 66 will also be expected.

Of course, with the increase in per capita income in various markets, the requirements for product quality are gradually getting rid of the initial needs that are easy to use. Health and environmental protection has become universal requirements. In summary, high strength, low volatile residual monomers, bright coloration, and rapid processability are the development trends of some or all of the styrene and nylon 66 series products. The Company’s historical research and development has focused on these trends, and constantly progressed and improved.

In June 2017, the Ministry of Commerce of the People’s Republic of China announced an anti-dumping investigation against styrene sold from Taiwan, South Korea and the United States. The final result was released in June 2018. Taiwan’s final tariff rate is 3.8%-4.2%. The final tariff rates of South Korea and the United States are 6.2%-7.5% and 13.7%-55.7%, respectively. This measure does not affect supply and demand at the global level, but it has reshaped the trade flows in different areas and the corresponding regional price gap.

Since October 2018, affected by the China-US trade war, the domestic downstream ABS/PS/EPS customers have been in slow down demand. They reduced operation rate and used importation to partially replace. This has made styrene face more difficult market changes. The spot price of styrene is also the first one to bear the brunt, and it has been revised down from its high point. It is worth to pay attention to the follow-up situation.

Currently, the actually broadcast satellite channels in the cable TV market total are about 100 channels. The Company has 7 self-production channels, and the market share is 7%.

Currently, the charged satellite channels in the cable TV market total are about 65 channels. The Company has 7 self-production channels and the market share is 10.7%.

As for video revenue, system vendors (cable TV companies) charge

video fees every month. The revenue is about NT$ 500 to 600 per household, and among the revenues, the amount could be used to purchase programs accounts about 40% (about NT$ 240). The number of households that can sign up for the contract is about 2.9 million.

The total video revenue of the channel provider is about NT$ 240 × 12 months × 2.9 million households = NT$ 8.35 billion.

The 2018 video revenue of Videoland Television Network Co., Ltd. is around NT$ 762,700,000. It accounts for 9.13% of total video revenues of channel operators.

As for advertisement business, according to advertisements impact elements including Nielsen media research and the MAA opinion based on the responses from media operators to the industry status, actual advertising pricing changes and ratings (GRP) media purchase reference, etc., the 2018 advertising statistics of the five major media and outdoor media are as follows:

==> picture [425 x 150] intentionally omitted <==

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

Ranking Media Actual advertisement Share
amount (Million dollar)
1 Cable TV 17,355 54.81%
2 News paper 3,687 11.65%
3 Magazine 1,898 6.00%
4 broadcast TV 2,923 9.23%
5 broadcast 1,799 5.68%
6 outdoor 4,000 12.63%
Total 31,662 100.00%
----- End of picture text -----

The 2018 advertisement revenue of Videoland Television Network Co., Ltd. is NT$1.378 billion and account 7.94% of cable TV advertisement.

Advantages, disadvantages and response measures of competitive niche and development prospects
(1) Competitive niche
- A. Continuously improve environmental protection and energy conservation, which is good to the sustainable business and operation of the company and the factory.
- B. Continue to pursue the improvement of production efficiency of each manufacture plant and maintain competitive advantage.
- C. The increase manufacture capacity of crystal-shaped plastics factory and increased the proportion of the Company’s high

quality product.

(2) Advantages, Disadvantages and Response Measures of future Prospects
Styrene monomer(SM)
- A. Advantage factors

Global styrene demand is still growing steadily.

Taiwan still has import demand.

(3) Although China has levied anti-dumping duties on SM and continues to increase manufacture capacity. It is still limited this year. It is estimated that China still needs to import about 2.6 million tons’ styrene in 2019 years to fill the demand gap.
B. Disadvantage factors
(1) The United States and the Middle East use abundant and inexpensive natural gas raw materials, and the cost of local raw materials is relatively high.
(2) The free trade agreements such as South Korea/United States/EU and ASEAN plus three, etc. are not good to the exportation of downstream industries.
(3) After the closure of fifth naphtha cracking factory of CPC Corporation, Taiwan, the supply of domestic petrochemical raw materials decreased.
(4) Environmental regulations have become stricter, and it is not easy to expand the manufacture capacity of large-scale petrochemical products in Taiwan.
(5) Petrochemical pipeline transportation capacity in Kaohsiung area is obviously limited after LCY explosion case and it increases the difficulty of dispatching imported petrochemical raw materials.
(6) China levies anti-dumping tax on SM and Taiwan is among them. It restricts Taiwan export SM to China and also makes Taiwan become export target of US and South Korean manufacturers and smashes domestic prices.
(7) China’s new manufacture capacity will be completed one after another and it is estimated that form 2019 its importation pressure will drastically reduce and even becomes one of the exporter countries of SM days after.

C. Response measures
- (1) To comply with the government policy “manufacture overseas and quality domestic,” the Company seeks overseas expansion opportunities to increase manufacture capacity and at the same to strivee to develop valued products
- (2) Continue to pursue the advancement and improvement of industrial safety and environmental protection, strengthen the production efficiency of each manufactory plant, and improve the overall comprehensive effect of energy saving and waste reduction.
- (3) Expand foreign suppliers and fill the gap with imported raw materials to maintain manufacture capacity.
- (4) Active transportation dispatching capability to ensure smooth operation of the styrene plant.
- (5) Find and strive for various expansion opportunities and expand production scale to reduce costs.
- (○6) Increase the downstream integration of styrene and alleviate the impact from anti-dumping and new manufacture capacity in the Mainland China.
Acrylonitrile-butadiene-styrene copolymer resin (ABS)

Global ABS demand continues to grow in recent years. In particular, the increase in demand for household appliances and automobile manufacturing in Mainland China has led to an increase in global ABS consumption. The profit difference is very good. This leads the increase of manufacture capacity and increased supply due to centralized manufacture by manufacturers. 2019 will be a challenge year of ABS. It will be affected by the overall economy, manufacture policy, supply, demand, cost and other factors.

A. Advantage factors
(1) It is predicted that the demand for ABS will continue to increase in the next few years. The new manufacture capacity is not much, and the supply presents a relatively weak balance.
(2) The supply of self-produced raw materials, SM, is sufficient and reduces the risk of raw material fluctuations.
(3) There has been 8 years from the China policy of home

appliance to the countryside in 2008 the financial turmoil and it has reached the year of replacement. After the economy gradually falls to the bottom and oil prices stabilize, the downstream industries of EPS, ABS, and HIPS are expected to recover slowly, and the demand will gradually rise steadily.

B. Disadvantage factors
- (1) China-US trade war, global economic and trade activities slow down, trade protectionism’s impact on the industry, and tariff barriers hinder market promotion.
- (2) The excessive dependence of raw material of AN and BD supply increases the impact of raw material fluctuation on profit.
- (3) The impact of alternative products: Use PS, PP, PE to replace ABS to save cost in home appliances and toys with low quality requirements
C. response measures
- (1) Strive to reduce costs and make full use of production capacity and hope to reduce the pressure caused by the dilution of the profit difference.
- (2) Provide customized product design and expand product layout for customers’ high valued product requirements.
- (3) Seeking to divert and disperse the market in Southeast Asia and other areas to expand the footprint.
- (4) Always pay attention to the domestic and international situation and the price trend of the main raw materials, and adjust the sales strategy.
Nylon (PA)
A. Advantage factors
- (1) The stable quality of products, positive R&D capability and timely customer service can enhance customers’ confidence in products.
- (2) The application and demand in the engineering plastics field continues to increase.
- (3) Nylon 66 has reduced production costs after plant expansion. The automotive electronics industry continues to grow, and the application and demand in the engineering plastics field will continue to increase.

     - B. Disadvantage factors

        - (1) The price of main raw material fluctuates greatly and is difficult to control.

        - (2) Chinese levies anti-dumping duties and it hinders the expansion in the Mainland China market

     - C. response measures

        - (1) Strive to develop specifications such as industrial wire slicing, textile grade products and special grade engineering plastics to create market differentiation and develop into high valued fields.

        - (2) Regular customer visits and fast and timely customer service capabilities, using enhanced after-sales service systems to enhance product added value.

        - (3) Expand the footprint in India, Southeast Asia and the Middle East to avoid excessive market concentration.

(II) Important uses and production processes of major products:
Important uses of major products:
- (1) Styrene monomer (SM)

Styrene monomer is widely used in the manufacture of various polystyrene resins (PS), acrylonitrile-butadiene-styrene resin (ABS), styrene-butadiene synthetic rubber (SBR), unsaturated Polyester resin (UP) and the like.

(2) Acrylonitrile-butadiene-styrene copolymer resin (ABS)

ABS resin is widely used and can be processed into large parts such as steam locomotive components, refrigerator lining, TV, tape recorder and video recorder, computer, the shells of washing machine, and small parts such as fan, toys, accessories, daily appliances, etc.

Important production processes of major products:
(1) Manufacture method of styrene

==> picture [329 x 169] intentionally omitted <==

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

Alkylation Benzene recovery Ethylbenzene
Ethylene reaction system purification Ethylbenzene
Transalkylation
reaction
Benzene
Dehydrogenation
Ethylbenzene reaction Benzene/toluene recovery system recovery systemEthylbenzene rectificationStyrene
Hydrogen Benzene Tolue Styrene
----- End of picture text -----

(2) Manufacture method of plastic

==> picture [338 x 225] intentionally omitted <==

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

SM AN
BD
PBL ABS Base
PB latex
Polymerization PBL grafting Power
polymerization
SM
SAN
SAN- bulk Compounding
polymerization Pellet
AN
additives
----- End of picture text -----

(III) Supply status of main raw materials:

Name of main raw materials suppliers Main sources supply status	Name of main raw materials suppliers Main sources supply status	Name of main raw materials suppliers Main sources supply status	Name of main raw materials suppliers Main sources supply status
Benzene CPC Corporation, Taiwan Domestic/overse as importation The supply shortage of CPC Corporation, Taiwan will be supplemented by importation.
Ethylene CPC Corporation, Taiwan Domestic The shortage will be supplemented by CPC Corporation, Taiwan.
Acrylonitrile Taiwan Petrochemical Development Corporation Domestic stable
Butadiene	CPC Corporation, Taiwan / Formosa Petrochemical Corporation	Domestic	The shortage will be supplemented by CPC Corporation, Taiwan or importation.

There are 5 channels of the sources of the programs:

Broadcast: In conjunction with the domestic and overseas sports competitions, the broadcast rights will be obtained from the organizers and broadcast live or video broadcast.
Self-made: The Company plans and produces the programs by itself.
Commissioning: Funded by the Company, delegating other communications companies to plan the production of programs or dramas within the established unit cost budget.
Outsourcing: Purchasing albums and films produced by domestic and foreign film, television and other communication companies.
Agent: Search for domestic and foreign well-made channels, and the company obtains channel distribution rights and advertising agency rights.

(IV) A list of any suppliers and clients accounting for 10 percent or more of the company’s total procurement (sales) amount in either of the 2 most recent fiscal years, the amounts bought from (sold to) each, the percentage of total procurement (sales) accounted for by each, and an explanation of the reason for increases or decreases in the above figures.

The main suppliers information of the 2 most recent fiscal years

 . GPPC group:

Unit: New Taiwan thousand dollars

The main suppliers information of the 2 most recent fiscal years . GPPC group: Unit: New Taiwan thousand dollars	The main suppliers information of the 2 most recent fiscal years . GPPC group: Unit: New Taiwan thousand dollars	The main suppliers information of the 2 most recent fiscal years . GPPC group: Unit: New Taiwan thousand dollars	The main suppliers information of the 2 most recent fiscal years . GPPC group: Unit: New Taiwan thousand dollars	The main suppliers information of the 2 most recent fiscal years . GPPC group: Unit: New Taiwan thousand dollars	The main suppliers information of the 2 most recent fiscal years . GPPC group: Unit: New Taiwan thousand dollars	The main suppliers information of the 2 most recent fiscal years . GPPC group: Unit: New Taiwan thousand dollars
2017 2018
Item Name Amount Ratio of annual net purchases (%) The relationship between issuer Name Amount Ratio of annual net purchases (%) The relationship between issuer
1 P7901 9,070,953 57.43 None P7901 7,827,560 44.29 None
Others 6,722,598 42.57 － Others 9,846,941 55.71 －
	Net purchases	15,793,551	100	Net purchases	17,674,501	100

 . Individual financial statement:

Unit: New Taiwan thousand dollars

. Individual financial statement: Unit: New Taiwan thousand dollars	. Individual financial statement: Unit: New Taiwan thousand dollars	. Individual financial statement: Unit: New Taiwan thousand dollars	. Individual financial statement: Unit: New Taiwan thousand dollars	. Individual financial statement: Unit: New Taiwan thousand dollars	. Individual financial statement: Unit: New Taiwan thousand dollars	. Individual financial statement: Unit: New Taiwan thousand dollars
2017 2018
Item Name Amount Ratio of annual net purchases (%) The relationship between issuer Name Amount Ratio of annual net purchases (%) The relationship between issuer
1 P7901 9,070,953 62.21 None P7901 7,827,560 51.82 None
Others 5,510,332 37.79 － Others 7,278,684 48.18 －
	Net purchases	14,581,285	100	Net purchases	15,106,244	100

The main customers’ information of the 2 most recent fiscal years.

 . GPPC group:

Unit: New Taiwan thousand dollars

The main customers’ information of the 2 most recent fiscal years. . GPPC group: Unit: New Taiwan thousand dollars	The main customers’ information of the 2 most recent fiscal years. . GPPC group: Unit: New Taiwan thousand dollars	The main customers’ information of the 2 most recent fiscal years. . GPPC group: Unit: New Taiwan thousand dollars	The main customers’ information of the 2 most recent fiscal years. . GPPC group: Unit: New Taiwan thousand dollars	The main customers’ information of the 2 most recent fiscal years. . GPPC group: Unit: New Taiwan thousand dollars	The main customers’ information of the 2 most recent fiscal years. . GPPC group: Unit: New Taiwan thousand dollars	The main customers’ information of the 2 most recent fiscal years. . GPPC group: Unit: New Taiwan thousand dollars
2017 2018
Item Name Amount Ratio to annual net salesrevenue (%) The relationship between issuer Name Amount Ratio to annual net sales revenue (%) The relationship between issuer
1 #4001 5,112,621 21.89 None #4001 4,993,987 20.18 None
Others 18,238,344 78.11 － Others 19,747,151 79.82 －
	net sales revenue	23,350,965	100	net sales revenue	24,741,138	100

 . Individual financial statement:

Unit: New Taiwan thousand dollars

==> picture [702 x 136] intentionally omitted <==

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

2017 2018
Item Name Amount Ratio to annual net The relationship Name Amount Ratio to annual net The relationship
sales revenue (%) between issuer sales revenue (%) between issuer
1 #4001 5,112,621 27.01 None #4001 4,993,987 24.59 None
2 GPPC 915,729 4.84 Subsidiary GPPC 1,103,107 5.43 Subsidiary
CHEMICAL CHEMICAL
CORPORATI CORPORATION
ON
Others 12,903,289 68.15 － Others 14,208,000 69.98 －
net sales 18,931,639 100 net sales revenue 20,305,094 100
revenue
----- End of picture text -----

Where the Company is prohibited by contract from revealing the name of a client, or where a trading counterpart is an individual person who is not a related party, it may use a code in place of the actual name

(V) Production value of the last two years

 . GPPC group:

Unit: New Taiwan thousand dollars; thousand tons / SM, ABS, HIPS, steam New Taiwan thousand dollars; thousand M[3] / H2 New Taiwan thousand dollars; million M[2 ] / package materials New Taiwan thousand dollars; million degree / electricity

==> picture [447 x 309] intentionally omitted <==

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

Production 2018 2017
Manufacture year
Manufacture Manufacture Manufacture Manufacture Manufacture
value Manufacture value
capacity quantity value capacity quantity
Main products
SM 370 345 11,459,746 370 360 11,498,115
ABS 120 91 4,586,022 120 88 4,028,863
H2 16,800 9,595 95,494 16,800 9,238 87,552
Electricity 257 308 500,100 257 319 441,028
Steam 1,242 1,040 667,250 1,242 1,080 597,832
Nylon 30 25 2,189,512 30 26 1,742,010
HIPS 50 31 1,330,757 50 27 1,117,216
Film amortization
and production 894,901 1,109,315
expenses
Commission and
342,614 425,556
royalties
Satellite channel
119,190 122,563
rental and others
Package materials 101 1,588,674 92 1,449,615
Sum －－ 23,774,260 －－ 22,619,665
----- End of picture text -----

 . Individual financial statement

Unit: New Taiwan thousand dollars, thousand tons / SM, ABS, steam New Taiwan thousand dollars, thousand M3 / H2 New Taiwan thousand dollars, million degrees / electricity

==> picture [449 x 171] intentionally omitted <==

100

(VI) An indication of the volume of units sold for the 2 most recent fiscal years

 . GPPC group

Unit: New Taiwan thousand dollars; thousand tons / petrochemical products, plastic products Unit: New Taiwan thousand dollars; thousand tons / petrochemical products, plastic products SM, ABS, HIPS, nylon, steam New Taiwan thousand dollar, thousand M[3] / H2 New Taiwan thousand dollars; million M[2 ] / package materials New Taiwan thousand dollars, million degrees / electricity

==> picture [480 x 247] intentionally omitted <==

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

Sales year 2018 2017
Manufacture Exportation Importation Exportation Importation
value
Quantity Value Quantity Value Quantity Value Quantity Value
Main products
Petrochemicals (SM) 258 10,141,837 14 481,584 288 10,617,607 0 0
Plastic products (ABS,
24 1,356,684 99 5,444,796 22 1,204,103 92 4,908,011
HIPS)
Nylon 15 1,506,078 10 1,176,819 14 958,288 12 980,915
H2 9,590 131,381 0 0 9,234 115,857 0 0
Electricity 145 274,651 0 0 147 246,397 0 0
Steam 164 152,745 0 0 188 145,549 0 0
Advertising video
2,024,364 300 2,196,201 5,474
channel revenue
Income from package 47 831,900 54 943,336 44 838,939 52 804,114
Others － 250,638 － 24,025 - 302,362 - 27,148
Total - 16,670,278 - 8,070,860 - 16,625,303 - 6,725,662
----- End of picture text -----

 . Individual financial statement

Unit: New Taiwan thousand dollars, thousand tons / SM, ABS, steam New Taiwan thousand dollars, thousand M[3] / H2 New Taiwan thousand dollars, million degrees / electricity

==> picture [480 x 171] intentionally omitted <==

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

Sales year 2018 2017
Manufacture Exportation Importation Exportation Importation
value
Quantity Value Quantity Value Quantity Value Quantity Value
Main products
SM 286 11,244,696 14 481,584 312 11,532,514 0 0
ABS 13 851,800 78 4,485,338 12 755,406 76 4,196,713
H2 9,590 131,383 0 0 9,234 115,857 0 0
Electricity 145 274,651 0 0 147 246,397 0 0
Steam 164 152,745 0 0 188 145,549 0 0
Nylon 15 1,506,078 10 1,176,819 14 958,288 12 980,915
Total - 14,161,353 - 6,143,741 - 13,754,011 - 5,177,628
----- End of picture text -----

101

III. The number of employees employed for the 2 most recent fiscal years, and during the current fiscal year up to the date of publication of the annual report, their average years of service, average age, and education levels (including the percentage of employees at each level):

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

16 April, 2019
Year 2017 2018 As of 16 April, 2019
The northern area 404 390 389
The central area 183 180 183
The
employee’ The southern area 386 384 382
s number
Overseas 195 196 188
Sum 1168 1150 1142
The average age 42 42 42
The average seniority 12 13 13
Ph.D 0.34% 0.26% 0.26%
Master 6.59% 6.78% 6.92%
Education
Bachelor 53.17% 53.30% 53.68%
levels
High school 53.17% 53.30% 53.68%
Below high school 5.57% 5.83% 5.87%
----- End of picture text -----

IV. Disbursements for environmental protection:

(I) Total losses (including damage awards) and fines for environmental pollution for the latest fiscal years, and during the current fiscal year up to the date of publication of the annual report, and an explanation of the measures (including corrective measures) and possible disbursements to be made in the future (including an estimate of losses, fines, and compensation resulting from any failure to adopt responsive measures, or if it is not possible to provide such an estimate, an explanation of the reason why it is not possible).

==> picture [494 x 256] intentionally omitted <==

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

Item 2018 2019 year and as of now
1. Leakage of equipment components in
1. Flare emits black smoke
petrochemical plants
2. The operation of flare does
2. Leaking of equipment components in plastic
not match the plan.
Pollution status factory
3. Leaking of device
(type, degree) 3. The flare emits black smoke
components.
4. The flare pilot flame is extinguished
4. The waste cleaning plan does
5. The surface of the wastewater is in contact
not match the current situation.
with the atmosphere
The indemnified Environmental Protection
Environmental Protection Bureau Kaohsiung
and disciplinary Bureau Kaohsiung City
City Government
unit. Government
The 1. NT$ 600,000 1. NT$ 200,000
indemnification 2. NT$ 400,000 2. NT$ 100,000
amount and 3. NT$ 100,000 3. NT$ 500,000
disciplinary 4. NT$ 100,000 4. NT$18,000
status. 5. NT$ 100,000
Other losses None None
----- End of picture text -----

102

1. response measures

(1) Improvement plan

Based on the Company’s CSR, the Company continues to invest in hardware to improve various pollution prevention and safety (reference to industrial safety and environmental capital expenditures as below) to hope to directly reduce pollution emissions and increase production safety. In addition, due to the large number of components in our factory, it is easy to leak and escape. Therefore, as for leakage and missing of equipment component, the factory continues to delegate qualified testing companies to conduct FLIR-wide factory-wide scanning and flame-type ion detectors for component-by-equipment component testing and also delegate SGS scans with infrared light to re-check to the leakage of equipment components in the past is missing. Because device component management cannot solely rely on external units, the on-site personnel also continued to carry out inspections by self-purchased flame ion detectors based on the responsibility of the district. The industrial safety and environmental department conducts sampling to ensure test integrity.

In another aspect, as for pollution reduction of combustion facilities, the factory has converted the whole plant steam boiler, heat medium boiler and steam heating furnace into natural gas for fuel to hope to more effective in reducing pollution emissions. In the working safety and environmental management aspect, the factory has implement OHSAS18000 Occupational Safety and Health Management System.

The Company will implement ISO-45001 system in the revised version in 2019 and the Company will introduce the Process Safety Management (PSM) system in three years and continue to operate the management system in an effective and effective manner through planning, manufacturing, auditing, and improvement. At the same time, to improve execution efficiency, the Company promotes the evaluation indicators of the work safety performance of various departments. In terms of employee safety protection, in addition to providing personal protective equipment such as goggles, earplugs and earmuffs, vertical fall arresters for employees to use; the Company continue to promote safety observation and encourage report of false alarms. To enable the factory process equipment to operate safely and smoothly to achieve production targets, the Company continues to give employees and contractors security education and training.

103

(2) The department having significant environmental capital expenditures in the coming year:

Unit: New Taiwan thousand dollars

==> picture [458 x 163] intentionally omitted <==

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

2018
The proposed procurement of pollution prevention Amount
equipment and its expenditure content (NT$ 1,000)
New lightning rod grounding 1,000
Reservoir/process area VOC Improvement Project (Phase 1,460
III)
SAN 500 area high voltage disc replacement 3,700
WV-937 slag fine screening machine replacement 950
-
SWGR#331 high voltage reeling and replacement 8,800
Total 15,910
----- End of picture text -----

Unit: New Taiwan thousand dollars

==> picture [458 x 163] intentionally omitted <==

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

2019
The proposed procurement pollution prevention equipment Amount
or its expenditure content (NT$ 1,000)
Exhaust scrubber 400
Dry fittings and piping for SM tanker 980
Storage tank and process area VOC improvement project 1,950
The replacement of whole plant monitoring system 2,950
CF-009 furnace body update 1,800
Infrared thermal imaging gas leak detector FLIR 3,850
Total 11,930
----- End of picture text -----

Those which has not adopted response measures: None.

104

V. Labor relations:

(I) List any employee benefit plans, continuing education, training, retirement systems, and the status of their implementation, and the status of labor-management agreements and measures for preserving employees’ rights and interests
Employee welfare

The Company has prescribed a process book of “employee welfare insurance”. In addition to labor insurance and health insurance, the Company also handles group insurance for its colleagues and the insurance coverage including spouse and family members. The Company also conducts health checkups for employees and hosts year-end party and spring party, etc. The Company has a staff welfare committee, which is responsible for welfare matters such as promoting annual tourism, training subsidies, wedding and funeral subsidies, emergency assistance, community activities, food subsidies, etc.

Employee training

The Company has an operating process book that standardizes internal training, external training, English ability/computer inspection, employee/environment license and other training. It is to enhances management and professional knowledge by legacy of experience. The Company also encourages colleagues to pursue degrees or special project to go to aboard to research and study. The names of prescribed processes related to employee training now is as below:

(1) Regulation of employee training.
(2) The process book of Kaohsiung factory employee training

The Company’s 2018 training expenses and expenditures.

(1) The Company’s 2018 training

The total expenses are NT$880,683.

The total training session is 206.

The total training attendant is 2,738.

The total training hours 6,478.

(2) The training content including:
Professional on-the-job training hosted by relevant departments Delegate others to train statutory license and professional courses
The internal course of external lecturers

Professional environment, safety, and health courses which are lectured and practiced by internal/external lectures

ISO training course

The technical training of Foreign technical consultant.

(3) Encourage the employee’s on-the-job training which is helpful to appraisal

105

and promotion .

The license situation of the Company’s personnel related to financial information transparency.

Audit personnel: Two internal auditors

HOU,LAN and CHEN,HUI-PING

(Zheng) zi no. 9310124, (Zheng) zi no. 9420059.

Financial and accounting personnel: The two chiefs of financial and accounting

CHEN,LING-CHU and CHEN,CHING-FU

2009 Hui Jiao (chief of accounting officer) chu zi no. 3003007 (2010) Zhuan Gao Hui Zi no. 000542

3. Employee behavior and ethical discipline

To make employee at all lever having ethical, rights, obligations and behaviors rules to follow, the Company prescribed many regulations and rules on employee behavior and ethical discipline. The brief of relevant regulations is as following:

(1) Organization regulation: It is to improve work efficiency, strengthen hierarchical management and effectively regulate the rights of all level employees.
(2) Department handbook and regulation of internal compliant: Clearly define the organization responsibility and functions of each department and supervise each other to establish department functions.
(3) Regulation of training and employment hiring: The training content and standards should be clearly defined in according to employee’s ranking and it is also related to promotion. Besides, in order to maximum the manufacture capacity and reduce the employee turnover rate, the Company assists new employee to get used to the new environment and personnel.
(4) Regulation of employee attendance: To make employee has rules to follow when vacation and leave, the Company completes the attendance system and establishes a good employee self-discipline.
(5) Regulation of employee performance and promotion: The Company annually review employee’s working result and performance and uses it as the basis of salary increasing, promotion and bonus distribution.
(6) The employee work standards and the operation process of proposed system improvement: The Company rewards or punishes the employee for gains or losses in its operations aroused from employee.
(7) Regulation of rotation between affiliates, Regulation of application and

106

subsidy of relocation expenses and business travel:

The regulation prescribes the rotation between affiliates and within the Company the business travel.

(8) The handover regulation of rotated or resigned employee and the process of proof of employment separation: The regulation prescribed rotated or resigned employee and the compliance matter of the issuance of employment separation.
(9) Regulations for Establishing Measures of Prevention, Correction, Complaint and Punishment of Sexual Harassment: To avoid sexual harassment in the working environment’s and maintain the gender equality and personal dignity, the Company prescribed rules about talking and behaviors in the working environment.
(10) Trade Secret/Personal Information Protection Act: To protect the Company’s trade secret and to protect business interest and competitive ability, the Company protects employee person information to avoid divulge and damage.
The implementation of pension system
(1) For the employees who choose the pension system of Labor Standards Act: The Company has prescribed operation process, Rules Governing Organization of Supervisory Committee of Labor Retirement Reserve, and established supervisory committee of labor retirement reserve. The Company handled the pension in according to or better than the labor standards acts. The Company regularly holds the meeting of supervision of labor retirement reserve and communicates and coordinates with employees and directors/supervisors of industrial union. The Company makes appropriation monthly in the pension funds in Taiwan Bank according to law and the supervisory committee of pension is responsible to supervise the allocation and use of the pension.
(2) For the employees who choose the pension system of Labor Pension Act(“New System”): The Company monthly appropriate 6 percent of the worker’s monthly wage to the personal pension funds account.
The important agreement between the labor and the management:
The company has Industrial union and labor management meeting. The
Company holds the labor-management meeting regularly and communicates abd coordinates with employees and directors/supervisors of labor union.
Work environment and employee personal safety protection measures The company holds the spirit of continuous improvement and the pursuit of

107

perfection. To reduce pollutant emissions and increase production safety, the Company not only continues to invest hardware but also improves pollution prevention and fire safety equipment. Besides, in the work safety management system aspect, to establish a good management system through planning, execution, auditing, and improvement, the Company has successfully introduced OHSAS18000 Occupational Safety and Health Management System. In employee safety protection aspect, the Company not only provide employees with personal protection equipment such as goggles, earplugs and earmuffs and vertical fall arrester, but also continuingly gives employees training about employee safety. It is the Company’s goal to make the operation of factory process equipment safe and smooth and to achieve the production goals.

(II) List any loss sustained as a result of labor disputes in the most recent fiscal year, and during the current fiscal year up to the date of publication of the annual report, disclose an estimate of losses incurred to date or likely to be incurred in the future, and indicate mitigation measures being or to be taken. If the loss cannot be reasonably estimated, make a statement to that effect: The Company always pay attention to communication with employees and harmony. All labor disputes can be resolved on the basis of mutual trust. There are no labor disputes in recent years and based on harmony labor relationship, it is estimated that there is no labor dispute in the future.

108

IV. Important agreements:

==> picture [491 x 275] intentionally omitted <==

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

The effective
The nature of the Limitation
Party date of the Main content
agreement condition
agreement
Lease agreement
of EB-3
Exxon Mobil Lease agreement of
28 January,
alkylation and Corporation of ethylbenzene -
2010 ~
transalkylation United States process catalyst
catalyst
CHINA January, 2019
Cannot
Benzene PETROCHEMICA to December, Agreement
resell
L CORPORATION 2019
CHINA January, 2019
Cannot
Ethylene PETROCHEMICA to December, Agreement
resell
L CORPORATION 2019
CHINA January, 2019
Cannot
Butadiene PETROCHEMICA to December, Agreement
resell
L CORPORATION 2019
----- End of picture text -----

109

Six. The overview of the company’s financial status

I. The condensed balance sheet and comprehensive income statement of the last five years and it should list the name of the CPA and his/her opinions

(I) Condensed Consolidated - International Financial Reporting Standards

Unit: New Taiwan thousand dollars

==> picture [505 x 429] intentionally omitted <==

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

Year
The financial information of the last five years
Item 2014 2015 2016 2017 2018
Current Assets 6,987,268 6,644,697 7,772,016 9,474,318 10,852,015
Real estate, factory and 8,707,755 8,282,258 8,259,961 7,778,233 7,427,473
equipment
Intangible assets 674,886 674,287 674,070 674,070 674,070
Other assets 8,019,904 7,529,124 8,299,001 10,073,294 10,906,343
Total assets 24,389,813 23,130,366 25,005,048 27,999,915 29,859,901
Current Before 4,053,116 2,474,365 2,887,286 3,131,118 2,877,053
Liabilities distribution
After 4,343,102 3,227,661 3,825,906 4,069,738 ＊
distribution
Non-current Liabilities 2,482,653 1,728,330 1,270,543 1,384,733 1,361,874
Total Before 6,535,769 4,202,695 4,157,829 4,515,851 4,238,927
liabilities distribution
After 6,825,755 4,955,991 5,096,449 5,454,471 ＊
distribution
Equities attribute to 15,576,241 16,614,692 18,244,524 20,718,147 22,738,990
stockholder of the parent
company
Capital 9,266,203 9,266,203 9,266,203 9,266,203 9,266,203
Capital reserve 112,393 115,935 123,604 147,446 180,533
Retained Before 5,411,882 6,577,702 8,192,056 10,538,796 12,608,192
earnings distribution
After 5,121,896 5,824,406 7,253,436 9,600,176 ＊
distribution
Other equities 985,367 854,456 862,265 887,872 739,639
Treasury Stock (199,604) (199,604) (199,604) (122,170) (55,577)
Non-controlling interest 2,277,803 2,312,979 2,602,695 2,765,917 2,881,984
Total Before 17,854,044 18,927,671 20,847,219 23,484,064 25,620,974
equity distribution
amount After 17,564,058 18,174,375 19,908,599 22,545,444 ＊
distribution
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It is further resolved by shareholders meeting.

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(II) Condensed Consolidated Income Statement - International Financial Reporting Standards

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Unit: New Taiwan thousand dollars
Year
The financial information of the last five years
Item 2014 2015 2016 2017 2018
Operating revenues 24,340,264 20,024,959 19,918,739 23,350,965 24,741,138
Gross Operating Margin 1,592,551 3,041,276 3,424,119 3,793,985 4,055,348
Operating gain(loss) 443,861 1,825,518 2,167,253 2,483,817 2,738,838
Non-operating Income and 310,067 158,948 916,876 1,699,258 1,318,110
Expenditure
Profit before tax 753,928 1,984,466 3,084,129 4,183,075 4,056,948
Net profit from continuing 490,681 1,652,077 2,578,738 3,447,650 3,150,741
operation of current term
loss from discontinuing 0 0 0 0 0
operation
Net gain/loss of current term 490,681 1,652,077 2,578,738 3,447,650 3,150,741
Other comprehensive gain/loss 148,384 (164,202) 176,686 84,777 (367,437)
(after tax) of current term
Total of Comprehensive Income 639,065 1,487,875 2,755,424 3,532,427 2,783,304
of Current Term
Net profit attributed to 292,518 1,472,319 2,400,690 3,288,642 2,960,106
stockholders of the parent
company
Net profit attributed to 198,163 179,758 178,048 159,008 190,635
non-controlling interest
Comprehensive income 439,236 1,324,895 2,375,459 3,310,967 2,633,570
attributed to stockholders of the
parent company
Comprehensive income 199,829 162,980 379,965 221,460 149,734
attributed to non-controlling
interest
Earnings per share (Note) NT$0.31 NT$1.62 NT$2.65 NT$3.64 NT$3.26
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Note. The earing per share is calculated on the basis of weighted outstanding shares.

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(III) Concise balance sheet - individual financial statement (International Financial Reporting Standards)

Unit: New Taiwan thousand dollars

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Year The financial information of the last five years
Item 2014 2015 2016 2017 2018
Current Assets 3,074,793 2,479,712 3,508,893 5,108,128 5,227,246
Real estate, factory and equipment 7,753,277 7,289,584 7,317,929 6,909,116 6,600,827
Intangible assets 0 0 0 0 0
Other assets 9,732,488 9,739,485 10,435,211 12,118,859 14,070,429
Total assets 20,560,558 19,508,781 21,262,033 24,136,103 25,898,502
Before 2,800,532 1,424,530 1,954,650 2,363,192 2,115,208
Current Liabilities distribution
After distribution 3,090,518 2,177,826 2,893,270 3,301,812 ＊
Non-current Liabilities 2,183,785 1,469,559 1,062,859 1,054,764 1,044,304
Before 4,984,317 2,894,089 3,017,509 3,417,956 3,159,512
Total liabilities distribution
After distribution 5,274,303 3,647,385 3,956,129 4,356,576 ＊
Capital 9,266,203 9,266,203 9,266,203 9,266,203 9,266,203
Capital reserve 112,393 115,935 123,604 147,446 180,533
Before 5,411,882 6,577,702 8,192,056 10,538,796 12,608,192
Retained
distribution
earnings
After distribution 5,121,896 5,824,406 7,253,436 9,600,176 ＊
Other equities 985,367 854,456 862,265 887,872 739,639
Treasury Stock (199,604) (199,604) (199,604) (122,170) (55,577)
Equities Before 15,576,241 16,614,692 18,244,524 20,718,147 22,738,990
Sum distribution
After distribution 15,286,255 15,861,396 17,305,904 19,779,527 ＊
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It is further resolved by shareholders meeting.

(IV) Condensed income statement – individual financial statement (International Financial Reporting Standards)

Unit: New Taiwan thousand dollars

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Year
The financial information of the last five years
Item 2014 2015 2016 2017 2018
Operating revenues 19,209,428 14,918,335 15,108,451 18,931,639 20,305,094
Gross Operating Margin 203,281 1,665,168 2,091,529 2,629,762 2,788,644
Operating (loss) gain (89,585) 1,334,324 1,710,850 2,165,523 2,299,040
Non-operating Income and 477,798 354,213 1,021,202 1,607,803 1,336,317
Expenditure
Profit before tax 388,213 1,688,537 2,732,052 3,773,326 3,635,357
Net profit from continuing 292,518 1,472,319 2,400,690 3,288,642 2,960,106
operation of current term
loss from discontinuing operation 0 0 0 0 0
Net gain/loss of current term 292,518 1,472,319 2,400,690 3,288,642 2,960,106
Other comprehensive gain/loss 146,718 (147,424) (25,231) 22,325 (326,536)
(after tax) of current term
Total of Comprehensive Income of 439,236 1,324,895 2,375,459 3,310,967 2,633,570
Current Term
Earnings per share (Note) NT$0.31 NT$1.62 NT$2.65 NT$3.64 NT$3.26
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Note. The earing per share is calculated on the basis of weighted outstanding shares.

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(V) Name of CPA and his/her opinion of the last five years

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Audit year Accounting firm The name of CPA Audit Opinions
LIN,MEI-LING and There is revised no
2014 Crowe (TW) CPAs
WANG,WU-CHANG reserved opinion.
LIN,MEI-LING and There is revised no
2015 Crowe (TW) CPAs
WANG,WU-CHANG reserved opinion.
HSIAO,YING-CHIA and There is no reserved
2016 Crowe (TW) CPAs
WANG,WU-CHANG opinion.
2017 Crowe (TW) CPAs HSIAO,YING-CHIA and There is no reserved
WANG,WU-CHANG opinion.
2018 Crowe (TW) CPAs HSIAO,YING-CHIA and There is no reserved
WANG,WU-CHANG opinion.
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II. The financial analysis of the last five years

(I) The consolidate financial analysis of the last five years (International Financial Reporting Standards)

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Year The financial analysis of last five years
Analysis item 2014 2015 2016 2017 2018
Finan
Debts to Assets 26.80 18.17 16.63 16.13 14.20
cial
struct
ure Long-term funds to real estate, factory 238.68 249.40 267.77 319.72 363.28
and equipment’s
(%)
Debt- Current ratio 172.39 268.54 269.18 302.59 377.19
payin Quick ratio 125.97 199.07 210.47 236.61 306.21
g
ability Times interest earned ratio 2,479.60 10,068.68 66,212.09 290,995.34 221,187.08
(%)
Average collection turnover (times) 8.71 8.68 7.68 7.39 7.87
Average collection days 41 42 47 49 46
Inventory turnover (times) 11.45 9.72 9.98 10.65 10.33
Opera
Average collection turnover(times). 12.44 10.29 9.70 10.28 11.84
ting
Average sales days 31 37 36 34 35
ability
Real estate, factory and equipment
2.75 2.36 2.41 2.91 3.25
turnover ratio (times)
Total assets turnover rate (times) 0.99 0.84 0.83 0.88 0.86
Return on assets (%) 2.10 7.02 10.73 13.01 10.90
Profit Return on equity (%) 2.72 8.98 12.97 15.55 12.83
ability Profit before tax to paid-in capital (%) 8.14 21.42 33.28 45.14 43.78
ability Net profit margin (%) 2.02 8.25 12.95 14.76 12.73
Earnings per share (dollar) 0.31 1.62 2.65 3.64 3.26
cash flow ratio (%) 60.84 159.21 113.35 128.09 159.06
Cash
flows Cash flow adequacy ratio (%) 141.12 158.13 177.09 243.69 250.25
Cash reinvestment ratio 4.90 11.55 7.46 8.39 9.27
Lever Operating leverage 6.97 2.57 2.56 2.14 2.20
age Financial leverage 1.08 1.01 1.00 1.00 1.00
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Explain the relevant financial ratios, their increases or decrease variance more than 20% in the last two years (2018 and 2017) and their reasons: 1. The current ratio increase 25% from the last period. It is because the current assets increases 15% from the last period and the current liabilities decreases 8% from the last period. 2. The quick ratio increases 29% from the last period. It is because the quick assets increase 19% from the last period and the current liabilities decreases 8% from the last period.

Times interest earned ratio decreases 24% from the last period. The main reasons are that the current income tax expenses and net profit before interest decrease 3% from the last period and that the interest expenses increases 28% from the last period.

The cash flow ratio increases 24% from last period. The main reasons are that cash from operating activity increases 14% from last period and that current liability decrease 8% from last year.

Note 1: The consolidated financial statements of each year have been audited by CPA.

Note 2: In the bottom of this table of annual report, it should list calculation formula as below:

Financial structure
(1) Debits ratio = total liabilities / total assets
(2) Long term funds to fixed assets = (total equity + non-current liabilities) / the net value of real estate, factory and equipment.
Debt-paying ability
(1) Current ratio = current assets / current liabilities
(2) Quick ratio = (current assets – inventories – prepaid expenses) / current liabilities.
(3) Interest coverage ratio = income before tax and interest / interest expenses in this current term.
Operating ability
(1) Receivable (including accounts receivables and notes receivables aroused from operation) turnover ratio= net sale / the balance of average accounts receivable in each term (including accounts receivables and notes receivables aroused from operation).
(2) Average collection days = 365 / average collection turnover
(3) Average inventory turnover = cost of goods sole / average inventory

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(4) Receivable (including accounts receivables and notes receivables aroused from operation) turnover ratio= cost of goods sold / the balance of average accounts receivable in each term (including accounts receivables and notes receivables aroused from operation).
(5) Average sales days = 365 / inventory turnover
(6) Real estate, factory and equipment turnover ratio = net sales / average net value of real estate, factory and equipment.
(7) Total assets turnover rate = net sale / average assets
earnings-generating capacity
(1) Return on total assets = (net income + interest expenses *(1-tax rate)) / average assets
(2) Return on total stockholder’s equity = net income / average owner’s equity
(3) Net profit margin = net income / net sales
(4) Earnings per share = Consolidated net income attributed to stockholders of the Company – earnings of preferred stock) / weighted average shares issued Note 3
Cash flow
(1) Cash flow ratio = net cash inflow from operating activities / current liabilities
(2) Net cash flow adequacy ratio = cash inflow from operating activities in the last five years / the investment expenditures, increase of inventories, and cash dividends of the last five years.
(3) The gross amount of cash flow reinvestment ratio = (cash inflow from operating activities – cash dividends) / (gross amount of real estate, factory, and equipment + long-term investment + other noncurrent asset + working capital) (Note 4)
Leverage:
(1) Operating leverage = (net sales – operating cost of goods sold and expenses) / operating income
(2) Financial leverage = operating income / (operating income – interest expenses)
Note 3: The formula for calculating the earnings per share should pay special attention to the following matters:
Based on the weighted average number of common shares, not based on the number of shares issued at the end of the year.
If there is new share of cash capital or a treasury stock transaction, it should be considered the issuance period and calculate the weighted average number of shares.
If there is capital increase through capitalization of retained earnings or capital reserve, it should be retrospectively adjusted according to the proportion of capital increase when calculating the earnings per share for the annual and semi-annual year: None.

There is no need to consider the issuance period.

If the preferred stock is a non-convertible preferred stock, its annual dividends (whether or not it is distributed) shall be net of the net profit after tax, or increase the net loss after tax.
If the preferred stock is not a accumulated preferred stock, when there is profit after tax, the dividends of the preferred stock shall be deducted from the net profit after tax. Whereas, if there is a loss, no adjustment is needed.
Note 4: When assess the cash flow, the following circumstances should be pay special attention to:
Net cash flow from operating activities refers to the net cash inflows from operating activities in the cash flow statement.
Capital expenditure refers to the number of cash outflows of capital investment in each year.
The increase in inventory is only included when the balance at the end of year is greater than the balance at the beginning of the year. If the inventory is reduced at the end of the year, it is calculated as zero.
Cash dividends include cash dividends for common stock and preferred stock.
Gross fixed assets refer to the total fixed assets before deducting accumulated depreciation.
Note 5: The issuer should classify various operating costs and operating expenses into fixed and variable categories. If there is related to estimation or subjective judgment, it should pay attention to reasonableness and consistency.

115

(II) Financial analysis for the last five years – individual financial statements (International Financial Reporting Standards)

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Year The financial analysis of last five years
Analysis item 2014 2015 2016 2017 2018
Finan
Debts to Assets 24.24 14.83 14.19 14.16 12.20
cial
struct
ure Long-term funds to real estate, factory, 234.73 248.08 263.84 315.13 360.31
and equipment
(%)
Debt- Current ratio (%) 109.79 174.07 179.52 216.15 247.13
payin Quick ratio (%) 59.47 82.01 114.09 145.83 168.99
g
abilit Times interest earned ratio (time) 1497.71 10,833.14 137,873.68 844,244.52 867,726.97
y (%)
Average collection turnover (times) 12.04 13.41 10.02 8.89 9.74
Average collection days 30 27 36 41 37
Oper Inventory turnover (times) 12.31 9.92 10.26 11.31 10.83
ating Average collection turnover(times). 15.45 13.30 11.54 11.53 13.44
abilit Average sales days 29 36 35 32 33
y Real estate, factory and equipment
2.44 1.98 2.07 2.66 3.01
turnover ratio (times)
Total assets turnover rate (times) 0.92 0.74 0.74 0.83 0.81
Profit Return on assets (%) 1.50 7.41 11.78 14.49 11.83
abilit Return on equity (%) 1.85 9.15 13.77 16.88 13.62
y Profit before tax to paid-in capital (%) 4.19 18.22 29.48 40.72 39.23
abilit
Net profit margin (%) 1.52 9.87 15.89 17.37 14.58
y Earnings per share (dollar) 0.31 1.62 2.65 3.64 3.26
cash flow ratio (%) 40.69 176.75 79.94 95.71 122.56
Cash
flows Cash flow adequacy ratio (%) 79.31 108.08 116.40 164.14 158.54
Cash reinvestment ratio 0.81 8.26 2.85 4.21 4.87
Lever Operating leverage - 2.37 2.22 1.62 1.91
age Financial leverage 0.76 1.01 1.00 1.00 1.00
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Explain the relevant financial ratios, their increases or decrease variance more than 20% in the last two years (2018 and 2017) and their reasons: The cash flow ratio increases 28% from the last period. The main reason is that the cash flow in operating activity increase 15% from the last period and the current liability decrease 10% from the last period.

116

III.Audit committee’s report for the most recent year’s financial statement

Grand Pacific Petrochemical Corporation Audit report of audit committee

The board of directors prepares and submits 2018 consolidated financial statements which have been audited by two attesting CPA of Crowe (TW) CPAs, CPA HSIAO,YING-CHIA and CPA WANG,WU-CHANG and etc. and the business report and earning distribution schedule that are inspected to be compliance with the Company Act and relevant regulations by audit committee and prepare report in accordance with Article 14-4 of Securities and Exchange Law and Article 219 of the Company Act.

2019 Regular Shareholders Meeting of Grand Pacific Petrochemical Corporation

Grand Pacific Petrochemical Corporation

The convener of audit committee

CHEN,WEN-TSUNG

25 April, 2019

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IV. Financial statement for the most recent fiscal year

Declaration on the Consolidated Financial Statement of Associated Enterprises

Companies that should be included in the compiled Consolidated Financial Statement of the Associated Enterprises for 2018 (from January 1, 2018 to December 31, 2018) in accordance with the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of the Affiliated Enterprises are identical to those that should be compiled in the Consolidated Statement of Parent Company and Subsidiaries per the International Financial Reporting Standard 10 and all the information that should be disclosed in the Consolidated Financial Statement of the Associated Enterprises has been disclosed in the Consolidated Statement of Parent Company and Subsidiaries. Therefore, the Consolidated Financial Statement of Associated Enterprises is not prepared separately.

Please take note of the above declaration.

Name of Company: Grand Pacific Petrochemical Corporation

Person in Charge: Pin-Cheng Yang

March 21, 2019

118

Grand Pacific Petrochemical Corporation and Its Subsidiaries CPA Audit Report

For review by Grand Pacific Petrochemical Corporation Company

Audit Opinions

We, as the CPAs, have completed the audit of the consolidated balance sheets dated December 31 of 2018 and 2017 and the consolidated comprehensive income statement, consolidated statement of changes in equity, consolidated statement of cash flows, and consolidated financial statement from January 1 to December 31 of 2018 and 2017, including summaries of major accounting policies of Grand Pacific Petrochemical Corporation and its subsidiaries.

As CPAs, according to the audit results from us and those from other CPAs (please refer to the paragraph about other matters), the above-mentioned consolidated financial statement, in all major respects, was prepared in compliance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and international financial reporting standards, international accounting standards, interpretations, and interpretation announcements approved and released to take effect by the Financial Supervisory Commission and hence are sufficient to show the consolidated financial standing of Grand Pacific Petrochemical Corporation and its subsidiaries as of December 31, 2018 and 2017 and the consolidated financial performance and consolidated cash flows between January 1 and December 31, 2018 and 2017.

Bases for the Audit Opinions

We followed the Rules Governing the Audit of Financial Statements by Certified Public Accountants and generally accepted auditing rules while performing the audit. The responsibilities of the CPAs under the said standards will be explained further in the section about responsibilities in auditing the consolidated financial statement. Independently governed staff in the accounting firm that the CPAs belong to have followed moral regulations in honor of the profession of CPA and have remained independent of the Grand Pacific Petrochemical Corporation and its subsidiaries and fulfilled other responsibilities under the said regulations. Based on the audit results from us and those from other CPAs, we believe that sufficient and adequate evidence has been obtained for the audit to serve as the basis for expressing the audit opinions.

Key Matters Being Audited

119

Key matters being audited refer to the most important matters based on the professional judgment of the CPAs to be included in the audit of the 2018 consolidated financial statement of Grand Pacific Petrochemical Corporation and its subsidiaries. Such matters were addressed throughout the audit of the consolidated financial statement and during the formation of audit opinions. The CPAs do not express separate opinions regarding these matters.

Key matters being audited of the 2018 consolidated financial statement of Grand Pacific Petrochemical Corporation and its subsidiaries are specified as follows:

Recognition of Income

Income is the basic operational activities for the sustainable management of an enterprise and concerns its operational performance and the management generally is faced with the pressure of fulfilling the expected financial or business performance goals. Therefore, it is pre-established that income recognition is associated with significant risk and we consider that the recognition of income from various types of transactions as one of the key matters being audited.

For the accounting policy on the recognition of income, please refer to Note 4 (34) of the consolidated financial statement. For information on accounting items for income, please refer to the disclosure in Note 6 (36) of the consolidated financial statement. Major audit procedures that are already carried out by the CPAs for the above-mentioned matters are as follows:

Test the validity of income from various types of transactions and the internal control for the payment collection cycle in terms of its design and implementation and evaluate by random sampling if the recognition of income is adequate.
Understand the type of sale and items involved in the sale with Top 10 customers in respective transaction patterns and evaluate the legitimacy of the income and the number of days involved in the turnover of accounts receivable and analyze if there is any abnormal variation among the customers.
Select samples from transactions in the respective patterns that take place before and after the balance sheet date and verify them against related certificates in order to evaluate the accuracy of the timing when income is recognized.

Cash and cash equivalents

As of December 31, 2018, the book value of cash and cash equivalents and time deposits and callable bonds with the original expiration date more than three months away (under other financial assets - current in the statement) held by Grand Pacific Petrochemical Corporation and its subsidiaries totaled $5,417,028 thousand, accounting for around 18% of the consolidated total asset

120

value. The value is significant for the overall consolidated financial statement. Due to the fact that congenital risk exists for cash and cash equivalents and time deposits and callable bonds with the original expiration date more than three months away, we list them as part of the key matters being audited.

For the accounting policy on cash and cash equivalents, please refer to Note 4 (6) of the consolidated financial statement. For information on the accounting items for cash and cash equivalents and time deposits and callable bonds with the original expiration date more than three months away, please refer to the disclosure in Note 6(1) and (8) of the consolidated financial statement. Major audit procedures that are already carried out by the CPAs for the above-mentioned matters are as follows:

Evaluate and test the validity of the internal control system for cash and cash equivalents and time deposits and callable bonds with the original expiration date more than three months away in terms of its design and implementation.
2.Randomly inspect and verify related transaction certificates for major income and payments in cash and review the adequacy of the approval power.
Obtain the statement of the balance of cash and cash equivalents and time deposits and callable bonds with the original expiration date more than three months away and verify against the bank reconciliation statement and related transaction certificates in order to confirm the presence. In addition, for external confirmations from current financial institutions, verify the value included in the confirmations and check if there are restrictions and they are adequately disclosed.
Impairment evaluation of real estate, plants, and equipment, investment oriented property and intangible assets (including good will)

As of December 31, 2018, the book value of real estate, plants, and equipment, investment-oriented property and intangible assets owned by Grand Pacific Petrochemical Corporation and Its subsidiaries totaled $ 8,181,386 thousand, accounting for around 28% of the total consolidated asset value and the value is significant for the overall consolidated financial statement. In addition, the overall economic trends, market competition, and technical development can all affect the future operations of the company and accordingly affect the expected economic benefits and the recoverable amount that may be generated in the future by the cash generating units for the assets estimated and determined by the management in order to evaluate if impairment exists. Therefore, the evaluation of impairment of real estate, plants, and equipment, investment-oriented property and intangible assets is listed by the CPAs as part of the key matters being audited.

121

For the accounting policy on the impairment of real estate, plants, and equipment, investment-oriented property and intangible assets, refer to Notes 4 (19), (21), (22), and (24). For information on accounting items for real estate, plants, and equipment, investment-oriented property and intangible assets, please refer to the disclosure in Note 6 (14), (15), and (16) of the consolidated financial statement. Major audit procedures that are already carried out by the CPAs for the above-mentioned matters are as follows:

Obtain the asset impairment assessment form for respective cash generating units that have been evaluated spontaneously by the Company.
Evaluate the legitimacy of impairment signs identified by the management and the assumption and sensitivity adopted, including whether the differentiation of cash-generating units, forecast of cash flows, and discount rate are appropriate or not.
Ask the management and review audit evidence obtained from the subsequent audit procedure for verification of absence of any matter related to impairment testing after the reporting date.

Valuation of investment balance adopting the equity method

The investment balance of Grand Pacific Petrochemical Corporation and its subsidiaries as of December 31, 2018 adopting the equity method totaled $ 6,227,702 thousand, accounted for around 21% of the total consolidated asset value. The net comprehensive income recognized with the equity method came to $ 639,422 thousand, accounting for around 23% of the total consolidated income. The impacted value is significant to the overall consolidated financial statement. Therefore, the CPAs include valuation of investment balance adopting the equity method as part of the key matters being audited.

For the accounting policy on investments adopting the equity method, please refer to Note 4 (18) of the consolidated financial statement. For information on accounting items for investments adopting the equity method, please refer to the disclosure in Note 6 (13) of the consolidated financial statement. Major audit procedures that are already carried out by the CPAs for the above-mentioned matters are as follows:

Evaluate the accuracy of calculation during valuation adopting the equity method and the adopted accounting policy.
Read the financial statements of underlying entities and audit reports from other CPAs and review important findings and issues identified during audit to facilitate communication and understanding and accordingly evaluate the audit task performed by and audit results from other CPAs of underlying entities.

122

Evaluate the legitimacy of impairment signs of investments adopting the equity method as identified by the management and the assumption and sensitivity adopted, including whether or not the forecast of profitability of companies invested in it in the future or the discount rate is appropriate.

－ Other Matters Mentioning Audits by other CPAs

As is stated in Note 4 (3)-2 and Note 6 (13) of the consolidated financial statement, some subsidiaries in the consolidated financial statement of the Grand Pacific Petrochemical Corporation and its subsidiaries are included - K.K. Chemical Company Limited and KK Enterprise (Malaysia) － Sdn. Bhd. and investments adopting the equity method We did not audit the financial statements of the Zhenjiang Chimei Chemical Company Limited; they were audited by other CPAs. Among the opinions we expressed on the above-mentioned consolidated financial statement, the amount listed in the above-mentioned financial statement of the Company and the above-mentioned information about the Company in Note 13 of the consolidated financial statement are completed based on audit reports from other CPAs. The total asset values of the said subsidiaries mentioned above as of December 31, 2018 and 2017, were $153,815 thousand and $150,937 thousand, accounting for 0.52% and 0.54% of the total consolidated asset value, respectively. The net worth of operating income from January 1 to December 31, 2018 and 2017, was $172,584 thousand and $164,778 thousand, accounting for 0.70% and 0.71% of the net worth of operating income, respectively. In addition, the related investment balance of invested companies adopting the equity method as mentioned above as of December 31, 2018 and 2017, was $5,509,893 thousand and $5,500,309 thousand, accounting for 18.45% and 19.64% of the total consolidated asset value, respectively. The net worth of comprehensive income from January 1 to December 31, 2018 and 2017, was $638,514 thousand and $1,917,430 thousand, accounting for 22.94% and 54.28% of the total consolidated comprehensive income, respectively.

Other Matters - Individual Financial Statement

Individual financial statements of 2018 and 2017 have been prepared by Grand Pacific Petrochemical Corporation and have been documented in the Audit Report without reservation in the opinions expressed issued by the CPAs; they are submitted for your reference.

Responsibilities of Management and Governance Unit for Consolidated Financial Statement

123

The management is responsible for preparing an adequately expressed consolidated financial statement in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and international financial reporting standards, international accounting standards, interpretations, and interpretation announcements approved and released to take effect by the Financial Supervisory Commission and maintaining necessary internal control relevant to the compilation of the consolidated financial statement in order to ensure that no significant untruthful expressions caused by frauds or errors exist in the consolidated financial statement.

While preparing the consolidated financial statement, the management is responsible for also evaluating the ability of Grand Pacific Petrochemical Corporation and its subsidiaries to continue with the operation and disclosing related matters and adopting the accounting basis for continued operation, among others. Unless the management intends to liquidate Grand Pacific Petrochemical Corporation and its subsidiaries or discontinue operation or there are no other actually feasible solutions than liquidation or discontinued operation.

The governance unit (including the Audit Committee) of Grand Pacific Petrochemical Corporation and its subsidiaries is responsible for supervising the financial reporting process.

Responsibilities of CPAs in Inspecting Consolidated Financial Statement

We audit the consolidated financial statement in order to be reasonably convinced as to whether the consolidated financial statement as a whole contains major untruthful expressions due to frauds or errors and to issue the audit report. Reasonably convinced is highly convinced. There is no guarantee, however, that the existence of significant untruthful expressions in the consolidated financial statement will be detected according to generally accepted auditing standards. Untruthful expressions might have been caused by frauds or errors. If individual values or an overview of untruthful expressions can be reasonably expected to affect economic decisions made by users of the consolidated financial statement, they are considered significant.

We apply our professional judgment and keep our professional doubts while performing the audit according to generally accepted auditing standards. The CPAs also perform the following tasks:

Identify and evaluate the risk of significant untruthful expressions in the consolidated financial statement due to frauds or errors, design and enforce appropriate responsive policies for determined risks; and collect sufficient and adequate evidence from the audit in order to render audit opinions. Due to the fact that frauds might involve collusion, forgery, intentional omission,

124

untruthful statement, or non-compliance with internal control, the risk associated with undetected significant untruthful expressions caused by frauds is higher than that caused by errors.
Obtain a necessary understanding of internal control concerning the audit in order to design appropriate audit procedures reflective of then-current situation. The purpose, however, is not to effectively express opinions on the internal control of Grand Pacific Petrochemical Corporation.
Evaluate the adequacy of accounting policies adopted by the management and the legitimacy of accounting estimates and related disclosures made.
Reach a conclusion with regard to the adequacy of the accounting basis adopted to continue with operation by the management and whether significant uncertainties of events or conditions that might result in significant concerns about the ability of Grand Pacific Petrochemical Corporation and its subsidiaries to continue with operation exist or not according to the evidence obtained from the audit. In the event that it is determined that significant uncertainties exist with such events or conditions, on the other hand, the CPAs must remind users of the consolidated financial statement in their audit report that they should pay attention to related disclosures included in the statement or modify their audit opinions if such disclosures are inappropriate. Conclusions made by the CPAs are based on the evidence from the audit obtained as of the date of the audit report. Future events or conditions, however, are likely to result in Grand Pacific Petrochemical Corporation and its subsidiaries no longer capable of continuing with operation.
Evaluate the overall expression, structure, and contents of the consolidated financial statement (including related notes) and whether or not the consolidated financial statement has fairly expressed related transactions and events.
Obtain sufficient and adequate evidence from the audit regarding the financial information of entities comprising Grand Pacific Petrochemical Corporation and its subsidiaries and express opinions about the consolidated financial statement. The CPAs are responsible for providing guidance on, supervising and implementing audits and for coming up with audit opinions for the Group.

Communications made by the CPAs with governance units include the planned scope and timing of the audit and significant audit findings (including significant deficiencies found with internal control during the audit).

125

relationships and other matters considered to be likely undermining the independence of CPAs (including related safeguard measures).

The CPAs, from the matters communicated with the governance units, decided key matters to be included in the 2018 consolidated financial statement audit of Grand Pacific Petrochemical Corporation and its subsidiaries. The CPAs specify such matters in the audit report unless it is disallowed by law to disclose to the public specific matters or under rare circumstances, the CPAs decide not to communicate specific matters in the audit report as it can be reasonably expected that negative impacts from such communication would be greater than the public interest that will be enhanced.

The engagement partners on the audit resulting in this independent auditors’ report are Ying-Jia Xiao and Shu-Chang Wang

Crowe Horwath International Approval document number: FSC Review No.10200032833 March 21, 2019

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with 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 such consolidated financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and consolidated financial statements shall prevail.

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	Grand Pacific Petrochemical Corporation and Its Subsidiaries	Grand Pacific Petrochemical Corporation and Its Subsidiaries	Grand Pacific Petrochemical Corporation and Its Subsidiaries
	Consolidated Balance Sheet
	December 31,2018	and 2017
				Unit: NTD 1,000
		December 31, 2018		December 31, 2017
Code	Assets	Value	`％`	Value	`％`
11xx	Current Assets	10,852,015 $	36	9,474,318 $	34
1100	Cash and Cash Equivalents (Note 6(1))	2,729,454	9	2,122,753	8
1110	Financial Assets at Fair Value through Income - Current	39,020	-	-	-
	(Note 6(2))
1140	Contract Assets - Current (Note 6(36))	60,364	-	-	-
1150	Net Worth of Notes Receivables (Note 6(3))	394,217	1	392,248	2
1170	Net Worth of Accounts Receivables (Note 6(4))	2,606,345	9	2,859,659	10
1180	Accounts Receivable - Related Party (Notes 6(4) and 7)	735	-	-	-
1200	Other Receivables (Note 6(5))	81,641	-	53,425	-
1220	Income Tax Assets of Current Term (Note 6(41))	310	-	55	-
1310	Net Worth of Inventory (Note 6(6))	1,980,783	7	2,023,166	7
1410	Advance Payment (Note 6(7))	93,541	-	87,698	-
1476	Other Financial Assets - Current (Notes 6(8) and 8)	2,698,945	9	1,676,020	6
1479	Other Current Assets - Others (Note 6(9))	166,660	1	259,294	1
15xx	Non-current Assets	19,007,886	64	18,525,597	66
1517	Financial Assets at Fair Value through Other Comprehensive ~~Income~~	4,220,226	14	-	-
	- Non-current (Note 6(10))
1523	Financial Assets Available for Sale - Non-current (Note ~~6(11))~~	-	-	3,570,483	13
1543	Financial Assets Carried at Cost - Non-current (Note 6(12))	-	-	459,269	2
1550	Investment with the Equity Method (Note 6(13))	6,227,702	21	5,500,309	19
1600	Property, Plant, and Equipment (Notes 6(14) and 8)	7,427,473	25	7,778,233	28
1760	Net Worth of Investment-oriented Property (Note 6(15))	79,843	-	80,866	-
1780	Intangible Assets (Note 6(16))	674,070	3	674,070	3
1840	Deferred Income Tax Assets (Note 6(41))	49,358	-	44,905	-
1920	Refundable Deposits (Note 6(17))	16,664	-	17,089	-
1985	Long-term Pre-paid Rent (Note 6(18))	9,130	-	9,602	-
1990	Other Non-current Assets - Others (Note 6(19))	303,420	1	390,771	1
1xxx	Total of Assets	29,859,901 $	100	27,999,915 $	100

127

	Grand Pacific Petrochemical Corporation and Its Subsidiaries	Grand Pacific Petrochemical Corporation and Its Subsidiaries	Grand Pacific Petrochemical Corporation and Its Subsidiaries
	Consolidated Balance Sheet
	December 31,2018 and 2017
				Unit: NTD 1,000
		December 31,2018		December 31,2017
Code	Liabilities and Equities	Value	`％`	Value	`％`
21xx	Current Liabilities	2,877,053 $	9	3,131,118 $	11
2100	Short-term Borrowing (Note 6(20))	2,833	-	37,581	-
2130	Contract Assets - Current(Note 6(36))	43,819	-	-	-
2150	Notes Payable	78,620	-	74,861	-
2170	Accounts Payable	1,470,375	5	1,869,657	7
2200	Other Payables(Note 6(21))	669,260	2	636,223	2
2230	Income Tax Liabilities of Current Term(Note 6(41))	586,361	2	402,037	2
2250	LiabilityReserve - Current(Note 6(22))	17,015	-	17,072	-
2310	Advance Receipts(Note 6(23)	152	-	44,054	-
2355	Payable Lease - Current(Note 6(26))	1,944	-	1,822	-
2399	Other Current Liabilities - Others(Note 6(24))	6,674	-	47,811	-
25xx	Non-current Liabilities	1,361,874	5	1,384,733	5
2550	LiabilityReserve - Non-current(Note 6(25))	8,486	-	6,944	-
2570	Deferred Income Tax Liabilities(Note 6(41))	1,249,285	5	1,264,223	5
2613	Payable Lease - Non-current(Note 6(26))	991	-	-	-
2640	Defined Benefit Liability- Non-current(Note 6(27))	74,157	-	87,803	-
2645	Guarantee Deposits(Note 6(28))	4,962	-	1,420	-
2670	Other Non-current Liabilities - Others(Note 6(29))	23,993	-	24,343	-
2xxx	Total of Liabilities	4,238,927	14	4,515,851	16
31xx	Equities That Belongto Clients of Parent Company
3100	Share Capital(Note 6(30))	9,266,203	31	9,266,203	33
3110	Common Stocks	9,066,203	30	9,066,203	32
3120	Preferred Stocks	200,000	1	200,000	1
3200	Additional Paid-in Capital(Note 6(31))	180,533	1	147,446	-
3300	Retained Earnings(Note 6(32))	12,608,192	42	10,538,796	38
3310	Legal Reserve	1,494,452	5	1,165,588	4
3320	Special Reserve	1,640,828	5	1,658,208	6
3350	Undistributed Earnings	9,472,912	32	7,715,000	28
3400	Other Equities(Note 6(33))	739,639	2	887,872	3
3410	Exchange Differences on Translation of Foreign Financial Sta	206,080) (	1) (	119,538) (	-
3420	Financial Assets at Fair Value through Other Comprehensive	I 945,719	3	-	-
	Unrealized Income
3425	Unrealized Income from Financial Assets Available for Sale	-	-	1,007,410	3
3400	TreasuryStock(Note 6(34))	55,577) (	-	122,170) (	-
31xx	Total of Equities That Belongto Clients of Parent Company	22,738,990	76	20,718,147	74
36xx	Uncontrolled Equities(Note 6(35))	2,881,984	10	2,765,917	10
3xxx	Total of Equities	25,620,974	86	23,484,064	84
3x2x	Total of Liabilities and Equities	29,859,901 $	100	27,999,915 $	100

128

	Grand Pacific Petrochemical Corporation and Its Subsidiaries	Grand Pacific Petrochemical Corporation and Its Subsidiaries	Grand Pacific Petrochemical Corporation and Its Subsidiaries
	Consolidated Comprehensive Income Statement
	January 1 through December 31,	2018 and 2017
				Unit: NTD 1,000
		January 1 through December 31,2018		January 1 through December 31,2017
Code	Item	Value	`％`	Value	`％`
4000	Operating Revenue (Note 6(36))	24,741,138 $	100	23,350,965 $	100
5000	Operating Cost (Notes 6(6) and (40))	20,685,790) (	84) (	19,556,980) (	84) (
5900	Gross Operating Margin	4,055,348	16	3,793,985	16
6000	Operating Expenses (Note 6(40))	1,316,510) (	5) (	1,310,168) (	5) (
6100	Selling Expense	302,890) (	1) (	283,842) (	1) (
6200	Management Expense	979,786) (	4) (	984,074) (	4) (
6300	Research and Development Expense	38,935) (	-	42,252) (	-
6450	Reversal Amount of Expected Credit Impairment Loss (Note 6(4))	5,101	-	-	-
6900	Net Operating Profit	2,738,838	11	2,483,817	11
	Non-operating Income and Expenditure
7010	Other Income (Note 6(37))	268,869	1	225,014	1
7020	Other Interest and Loss (Note 6(38))	62,661	-	71,995) (	-
7050	Financial Cost (Note 6(39))	1,835) (	-	1,438) (	-
7060	Share of Profit of Associates and Joint Ventures Accounted for	988,415	4	1,547,677	6
	(Note 6(13))
7000	Total of Non-operating Income and Expenditure	1,318,110	5	1,699,258	7
7900	Income from Continuing Operation before Tax	4,056,948	16	4,183,075	18
7950	Income Tax Expense (Note 6(41))	906,207) (	4) (	735,425) (	3) (
8200	Net Profits of Current Term	3,150,741	12	3,447,650	15
	Other Comprehensive Income
	Items Not Re-categorized to Income
8316	Investment in Equity Instruments at Fair Value through Other	280,712) (	1) (	-	-
	Unrealized Valuation Income (Note 6(10))
8311	Re-measurement of Defined Benefit Plans (Note 6(27))	1,822	-	1,765) (	-
8349	Income Tax Associated with Items Not Re-categorized (Note	2,158	-	425	-
8310	Total of Items Not Re-categorized to Income	276,732) (	1) (	1,340) (	-
	Items Possibly Re-categorized to Income Later
8361	Exchange Differences on Translation of Foreign Financial	223,298	1	481,153) (	2) (
8362	Unrealized Valuation Gains of Financial Assets Available for Sale	-	-	234,492	1
8370	Share of Other Comprehensive Income of Associates and Joint	348,993) (	1) (	369,753	1
	-Items Possibly Re-categorized to Income (Note 6(13))
8399	Income Tax Associated with Items Possibly Re-categorized to	34,990	-	36,975) (	-
8360	Items Possibly Re-categorized to Income Later	90,705) (	-	86,117	-
8300	Other Comprehensive Income of Current Term (Net Worth After	367,437) (	1) (	84,777	-
8500	Total of Comprehensive Income of Current Term	2,783,304 $	11	3,532,427 $	15
8600	Net Profits Belong to:
8610	Clients of Parent Company	2,960,106 $	12	3,288,642 $	14
8620	Uncontrolled Equities (Note 6(35))	190,635	-	159,008	1
		3,150,741 $	12	3,447,650 $	15
8700	Comprehensive Income Total Belongs to:
8710	Clients of Parent Company	2,633,570 $	11	3,310,967 $	14
8720	Uncontrolled Equities (Note 6(35))	149,734	-	221,460	1
		2,783,304 $	11	3,532,427 $	15
	Earnings per Share of Common Stock: (NT$) (Note 6(43)
9750	Fundamental Earnings per Share	3.26 $		3.64 $
9850	Diluted Earnings per Share	3.25 $		3.63 $

129

					Grand Pacific Petrochemical Corporation and Its Subsidiaries	Grand Pacific Petrochemical Corporation and Its Subsidiaries	Grand Pacific Petrochemical Corporation and Its Subsidiaries	Grand Pacific Petrochemical Corporation and Its Subsidiaries
					Consolidated Statement of Changes in Equity
					January1 through December 31,2018 an			d 2017
														Unit: NTD 1,000
		Share Capital				Retained Earnings			Other Equities
Code	Item	Common StocksP	referred Stockt	sional Paid-in C	a Legal Reserve	Special Reserve	Undistributed Earnings	Exchange Differences on Translation of Foreign Financial	Unrealized Income from Financial Assets at Fair Value through Other	Available for Sale Financial Assets Unrealized Income	Treasury Stock	Equities That Belong to Clients of Parent Company	Uncontrolled Equity	Total of Equities
A1	Balance as of January1, 2017	9,066,203 $	200,000 $	123,604 $	925,519 $	1,700,322 $	5,566,215 $	27,250 $	- $	835,015 $	199,604) ($	18,244,524 $	2,602,695 $	20,847,219 $
	Appointment and Distribution of Earnings 2016:
B1	Appropriation of Legal Reserve	-	-	-	240,069	-	240,069) (	-	-	-	-	-	-	-
B17	Turnover of Special Reserve	-	-	-	-	42,114) (	42,114	-	-	-	-	-	-	-
B5	Common Stock Cash Dividends	-	-	-	-	-	906,620) (	-	-	-	-	906,620) (	40,616) (	947,236) (
B7	Preferred Stock Cash Dividends and Stock Dividends	-	-	-	-	-	32,000) (	-	-	-	-	32,000) (	-	32,000) (
C3	~~Other Changes in Additional Paid-in Capital: As a~~ ~~lt f ti ift~~	-	-	1,067	-	-	-	-	-	-	-	1,067	4	1,071
L7	~~resu o accepng gs~~ ~~Disposal of parent company shares by subsidiaries is~~ ~~idd tti f t tk~~	-	-	13,455	-	-	-	-	-	-	77,434	90,889	-	90,889
M1	~~consere as a ransacon o reasury socs~~ Adjustment of Additional Paid-in Capital Due to Issuan	c -	-	9,320	-	-	-	-	-	-	-	9,320	-	9,320
D1	Net Profits from January1 to December 31, 2017	-	-	-	-	-	3,288,642	-	-	-	-	3,288,642	159,008	3,447,650
D3	~~Other Comprehensive Income After Tax from January~~ ~~1 t Db 312017~~	-	-	-	-	-	3,282) (	146,788) (	-	172,395	-	22,325	62,452	84,777
O1	~~o ecemer ~~ ~~Decrease in Uncontrolled Equity (Cash Capital~~ ~~Decrease of Subsidiar)~~	-	-	-	-	-	-	-	-	-	-	-	17,626) (	17,626) (
Z1	~~y~~ Balance as of December 31, 2017	9,066,203 $	200,000 $	147,446 $	1,165,588 $	1,658,208 $	7,715,000 $	119,538) ($	- $	1,007,410 $	122,170) ($	20,718,147 $	2,765,917 $	23,484,064 $
A1	Balance as of January1, 2018	9,066,203 $	200,000 $	147,446 $	1,165,588 $	1,658,208 $	7,715,000 $	119,538) ($	- $	1,007,410 $	122,170) ($	20,718,147 $	2,765,917 $	23,484,064 $
A3	~~Effect of Retrospective Application and~~ ~~Rtti Rttt (Nt 3(1))~~	-	-	-	-	-	42,398	-	1,191,225	1,007,410) (	-	226,213	12,745	238,958
	~~erospecve esaemen oe~~ Appointment and Distribution of Earnings 2017:
B1	Appropriation of Legal Reserve	-	-	-	328,864	-	328,864) (	-	-	-	-	-	-	-
B17	Turnover of Special Reserve	-	-	-	-	17,380) (	17,380	-	-	-	-	-	-	-
B5	Common Stock Cash Dividends	-	-	-	-	-	906,620) (	-	-	-	-	906,620) (	46,416) (	953,036) (
B7	Preferred Stock Cash Dividends and Stock Dividends	-	-	-	-	-	32,000) (	-	-	-	-	32,000) (	-	32,000) (
C3	~~Other Changes in Additional Paid-in Capital: As a~~ ~~lt f ti ift~~	-	-	1,732	-	-	-	-	-	-	-	1,732	4	1,736
L7	~~resu o accepng gs~~ ~~Disposal of parent company shares by subsidiaries is~~ ~~idd tti f t tk~~	-	-	28,266	-	-	-	-	-	-	66,593	94,859	-	94,859
M1	~~consere as a ransacon o reasury socs~~ Adjustment of Additional Paid-in Capital Due to Issuan	c -	-	3,089	-	-	-	-	-	-	-	3,089	-	3,089
D1	Net Profits from January1 to December 31, 2018	-	-	-	-	-	2,960,106	-	-	-	-	2,960,106	190,635	3,150,741
D3	~~Other Comprehensive Income After Tax from January~~ ~~1 t Db 312018~~	-	-	-	-	-	5,512	86,542) (	245,506) (	-	-	326,536) (	40,901) (	367,437) (
Z1	~~o ecemer ~~ Balance as of December 31, 2018	9,066,203 $	200,000 $	180,533 $	1,494,452 $	1,640,828 $	9,472,912 $	206,080) ($	945,719 $	- $	55,577) ($	22,738,990 $	2,881,984 $	25,620,974 $

130

	Grand Pacific Petrochemical Corporation and Its Subsidiaries	Grand Pacific Petrochemical Corporation and Its Subsidiaries
	Consolidated Statement of Cash Flows
	January 1 through December 31, 2018 and 2017
			Unit: NTD 1,000
Code	Item	January 1 through December 31,2018	January 1 through December 31,2017
AAAA	Cash FlowsfromOperatingActivities:
A00010	IncomefromContinuing OperationbeforeTax	4,056,948 $	4,183,075 $
A20000	AdjustedItems:
A20010	Income Charges(Credits)not AffectingCash
A20100	DepreciationCost(including depreciation listedfor investment-oriented properties)	856,561	879,591
A20200	AmortizedExpenses	741,235	922,026
A20400	Net(Profit)Loss of Financial Assetsat FairValuethrough Income	20) (	24
A20900	Interest Expense	1,835	1,438
A21200	InterestIncome	67,249) (	34,992) (
A21300	DividendIncome	156,062) (	154,091) (
A22300	Share of Profit of Associates and Joint VenturesAccountedforUsing theEquityMethod	988,415) (	1,547,677) (
A22500	Net Loss from Disposingand Scrappingof Propertyand Equipment	943	5,779
A22600	Transfer Fees of Property,Plant,and Equipment	46,031	21,726
A23100	Profitsfrom DisposingInvestments	94) (	57) (
A23500	Impairment Loss of Financial Assets	-	540
A23700	Impairment Loss ofNon-Financial Assets	10,007	22,366
A20010	Totalof Income Charges (Credits)notAffecting Cash	444,772	116,673
A30000	Variation in Assets/LiabilitiesRelated to OperatingActivities
A31110	NetDecreasein Financial AssetsAvailablefor Transaction	-	130,060
A31115	NetIncreasein Financial AssetsMeasured Compulsorily atFairValue through Income	38,906) (	-
A31125	Increase in Contract Assets	60,364) (	-
A31130	(Increase)Decrease in Notes Receivable	1,969) (	43,604
A31150	(Increase)Decreasein AccountsReceivable	253,314	262,541) (
A31160	Increasein AccountsReceivable- RelatedParty	735) (	-
A31180	IncreaseinOther Receivables	13,447) (	21,521) (
A31200	(Increase)Decreasein Inventory	42,383	372,659) (
A31230	Increasein AdvancePayment	5,843) (	1,234) (
A31240	DecreaseinOtherCurrentAssets-Others	66	538
A32125	Decrease in Contract Liability	111) (	-
A32130	Increase(Decrease)in Notes Payable	3,759	15,558) (
A32150	Increase (Decrease)in AccountsPayable	399,282) (	99,722
A32180	IncreaseinOther Payables	36,627	71,227
A32200	Increasein LiabilityReserve	1,485	3,233
A32210	Increasein AdvanceReceipts	28	31,067
A32230	Increase (Decrease)inOtherCurrentLiabilities-Others	41,137) (	34,583
A32240	Decreasein DefinedBenefitLiability	11,824) (	48,189) (
A30000	TotalofVariation in Assets/LiabilitiesRelated to OperatingActivities	235,956) (	307,668) (
A33000	Case In-flows from Business Operation	4,265,764	3,992,080
A33100	Collected Interest	52,480	28,327
A33200	CollectedDividends	964,327	495,948
A33300	PaidInterest	1,835) (	1,438) (
A33500	PaidIncomeTax	704,381) (	504,128) (
AAAA	Net Cash In-flowsfromOperatingActivities	4,576,355	4,010,789

131

BBBB	Cash Flowsfrom Investment Activities:
B00010	Acquisitionof Financial Assets at FairValuethroughOtherComprehensiveIncome	236,237) (	-
B00030	Capital Allocation for Financial Assets at Fair Value through Other Comprehensive Income	9,585	-
B01200	Acquisitionof Financial Assets CarriedatCost	-	73,122) (
B01400	Capital Allocationof Financial Assets Carried at Cost	-	8,833
B01800	Acquisition of Investments with the EquityMethod	716,901) (	52,080) (
B02700	Cancellationof Property,Plant,andEquipment	535,792) (	442,202) (
B02800	Disposalof Property,Plant, andEquipment	241	182
B03800	(Increase)Decrease in Refundable Deposits	425	395) (
B06500	IncreaseinOther Financial Assets	1,022,925) (	137,114) (
B07100	Increase in Advance Payment for Equipment	-	7,391) (
B06700	IncreaseinOther Non-current Assets	570,697) (	1,194,465) (
BBBB	NetCashOut-flowsfrom Investment Activities	3,072,301) (	1,897,754) (
CCCC	Cash Flows from FundraisingActivities:(Note 6(42))
C00200	DecreaseinShort-term Borrowing	34,748) (	57,725) (
C03000	IncreaseinGuaranteeDeposits	3,542	298
C04000	Decrease in Lease Payable	2,776) (	3,688) (
C04500	Issuance ofCash Dividend	938,620) (	938,620) (
C05000	Disposalof Treasury Stock	94,859	90,889
C09900	Additional Paid-inCapital Due to Return and Transfer of DividendUnclaimed Past Deadline	1,736	1,071
C09900	AcquisitionofCash Dividend by Subsidiaryfrom ParentCompany	3,089	9,320
C09900	SubsidiaryIssuance of Cash Dividend to Uncontrolled Equity	46,416) (	40,616) (
C09900	SubsidiaryPaying CashCapital Decrease Valueto UncontrolledEquity	17,626) (	22,666) (
CCCC	NetCashOut-flowsfrom FundraisingActivities	936,960) (	961,737) (
DDDD	Impacts of FluctuatingExchange Rate on Cash and Cash Equivalents	39,607	94,508) (
EEEE	IncreaseinCash and Cash Equivalents ofCurrent Term	606,701	1,056,790
E00100	Balance ofCashand Cash Equivalentsin Beginning of Term	2,122,753	1,065,963
E00200	Balance of Cash and Cash Equivalents at End of Term	2,729,454 $	2,122,753 $
E00210	Cash and Cash EquivalentsListedinConsolidatedBalance Sheet	2,729,454 $	2,122,753 $

132

Grand Pacific Petrochemical Corporation and Its Subsidiaries

Notes to Consolidated Financial Statement

January 1 through December 31, 2018 and 2017

(Unless specified otherwise, the currency unit is NTD 1,000.)

I. Company History

Grand Pacific Petrochemical Corporation (hereinafter referred to as “the Company”) was approved to be established on September 25, 1973 according to the Company Act and other applicable laws and regulations. It was originally named Dadechang Petrochemical Corporation and the name was changed to Grand Pacific Petrochemical Corporation in 1985. The Company’s main scope of operation is as follows:

(I) Manufacturing of petrochemical raw materials
(II) Manufacturing of synthetic resin and plastics
(III) Manufacturing of other chemical products
(IV) Cogeneration, thermal energy supply, and international trade
(V) Operations that are not prohibited or restricted by law besides the said approved ones The Company’s factory is located in Dashe District, Kaohsiung.

The Company’s stock started to be traded in the Taiwan Stock Exchange on December 21, 1988.

There is no ultimate parent company for the Company.

New Taiwan Dollar is the functional currency of the Company. Due to the fact that the Company is listed in Taiwan, for the sake of increased comparability and consistency, the consolidated financial statement herein is expressed in New Taiwan Dollar.

Unless specified otherwise, the Company and its subsidiaries consisting of the consolidated financial statement are referred to collectively as “the Group.”

II. Approval date and procedure of the financial statement

This consolidated financial statement was approved by the Board of Directors on March 21, 2019.

III) Newly Released and Revised Standards and Applicable Interpretation
(I) Impacts from the newly released and revised International Financial Reporting Standards adopted by the Financial Supervisory Commission (the “FSC”):
- According to the FSC Review No. 1060025773 order dated July 14, 2017 and the FSC Review No. 1060023231 order dated June 28, 2017 from the Financial Supervisory Commission, the Group shall adopt the applicable international financial reporting

133

standards (IFRS), international accounting standards (IAS), interpretations (IFRIC), and interpretation announcements (SIC) (hereinafter referred to as the “IFRSs”) released by the International Accounting Standards Board (hereinafter referred to as the "IASB") and approved by the Financial Supervisory Commission (hereinafter referred to as the “FSC”) to be applicable in 2018 while preparing financial statements. The following summarizes the newly released, modified, and revised guidelines and interpretations of IFRSs approved by the FSC to be applicable in 2018:

The newly released/ modified/ revised guidelines and interpretations

International Accounting Standard 7 Revision of "Disclosure Initiative"

An effective date released by the IASB January 1, 2017

An effective date The newly released/ modified/ revised guidelines and interpretations released by the IASB International Accounting Standard 12 Revision of “Deferred Tax January 1, 2017 Assets for Unrealised Losses ” Annual improvement for the 2014-2016 - International Financial January 1, 2017 Reporting Standard 12 “Disclosure of Interests in Other Entities” International Financial Reporting Standard 9 “Financial Instrument” January 1, 2018 International Financial Reporting Standard 15 "Revenue from January 1, 2018 Contracts with Customer” International Financial Reporting Standard 15 Revision of January 1, 2018 “Clarifications to IFRS 15 Revenue from ‘Contracts with Customers’ Issues emerging from TRG discussions” International Financial Reporting Standard 2 Revision of January 1, 2018 “Classification and Measurement of Share-Based Payment Transactions” International Financial Reporting Standard 4 Revision of “Applying January 1, 2018 IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts” International Accounting Standard 40 Revision of "Transfers of January 1, 2018 Investment Property” International Financial Reporting Interpretations Committee 22 January 1, 2018 “Foreign Currency Transactions and Advance Consideration” Annual improvement for the 2014-2016 - International Financial January 1, 2018 Reporting Standard 1 “First-time Adoption of International Financial Reporting Standards” January 1, 2018 Annual improvement for the 2014-2016 - International Accounting Standard 28 “Investments In Associates And Joint Ventures”

Besides the descriptions below, it is evaluated by the Group that by applying the above-mentioned standards and interpretations it will not result in major impacts on the Group’s consolidated financial standing and consolidated financial performance:

International Financial Reporting Standard 9 "Financial Instruments"
(1) Financial asset liability instruments are determined according to the business operation model and properties of contract cash flows. They can be categorized

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into financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income, and financial assets measured at post-amortized cost. Financial asset equity instruments are categorized as financial assets at fair value through profit or loss, unless an enterprise makes an irreversible choice to recognize the fair value of equity instruments not meant for purpose of transaction under other comprehensive income.

(2) For the impairment assessment of financial asset liability instruments, the expected credit loss model shall be adopted. Whether there is significant increase in the credit risk of the said instruments is evaluated on each balance sheet date so that the 12-month expected credit loss or the expected credit loss for the duration (Interest income prior to occurrence of impairment is estimated according to the total book value of assets) applies. If impairment has occurred, on the other hand, interest income following occurrence of impairment is estimated with the book net worth after allowance for bad debts is appropriated. For accounts receivable (excluding major financial components), allowance for bad debts is recognized according to the expected credit loss for the duration.

(3) IFRS	9 “Financial Instruments” replaces IAS 39 “Financial Instruments:	9 “Financial Instruments” replaces IAS 39 “Financial Instruments:	9 “Financial Instruments” replaces IAS 39 “Financial Instruments:	9 “Financial Instruments” replaces IAS 39 “Financial Instruments:	9 “Financial Instruments” replaces IAS 39 “Financial Instruments:
Recognition and Measurement” and IFRS 7 “Financial Instruments: Disclosure”
among other standards		are amended	accordingly as well. Based on the
transitional requirements		of IFRS 9, the Group evaluates the		operational	model
and categorizes financial assets according to IFRS 9 to appropriate categories
based	on the facts and situations that were present on January 1, 2018 (initial
date of application) and adjusts them retroactively and chooses not to re-arrange
the comparison period. On January 1, 2018 the type of measure and book value
of financial assets in the		respective categories according to the decisions			based
on IAS 39 and IFRS 9 and their variation are summarized as follows:
	International Accounting Standard (IAS)		International Financial Reporting Standard
	39		(IFRS) 9
Classification of Financial Asset	Measurement Type	Book value	Measurement Type	Book value	Descr
					iption
Cash and cash equivalents	Loans and accounts	$ 2,122,753	Post-amortized cost	$ 2,122,753	A
	receivable
Notes, accounts receivable and	Loans and accounts	3,305,332	Post-amortized cost	3,305,332	A
other receivables	receivable
Other financial assets－current	Loans and accounts	1,676,020	Post-amortized cost	1,676,020	A
	receivable
Stock Investment of Tsec-Listed	Financial assets	3,570,483	Financial Assets at	3,570,483	B
and OTC-Listed	available for sale		Fair Value through
			Other Comprehensive
			Income
The shares yet to be listed and	Financial assets	459,269	Financial Assets at	698,227	B
limited partnership investment	carried at cost		Fair Value through
			Other Comprehensive
			Income
Refundable deposits	Loans and accounts	17,089	Post-amortized cost	17,089	A
	receivable

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Item January 1, 2018 Re-categorized Re-measured January 1, 2018 January 1, 2018 January 1,
Book value Book value Effect of 2018
(IAS 39) (IAS 39) Retained Effect of
Earnings Other
Equities
Financial assets at fair $ - $ 4,029,752 $ 238,958 $ 4,268,710 $ 47,739 $ 191,219
value through
other
comprehensive
－
profits or losses
Equity Instrument
Increase: 3,570,483 ( 3,570,483) －－－－
Re-categorized
financial assets
available for sale
(IAS 39)
Increase: 459,269 ( 459,269) －－－－
Re-categorized
financial assets
carried at cost
(IAS 39)
Total $ 4,029,752 $ - $ 238,958 $ 4,268,710 47,739 191,219
Decrease: Belong to ( 5,341) ( 7,404)
Effect of
Uncontrolled
Equity
Belong to Effect of Clients of Parent $ 42,398 $ 183,815
Company
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A. Cash and cash equivalents, notes receivable, accounts receivable, other －
receivables, and other financial assets current (bank savings with restricted purposes and time deposits with the original expiration date more than three months away) and refundable deposits of the Group were originally classified as loans and accounts receivable according to IAS 39. Due to the fact that the operational model involves collection of contract cash flows in nature, as is required by IFRS 9, they are classified as financial assets measured at post-amortized cost and the expected credit loss is evaluated. In addition, the Group performed impairment assessment as required by IFRS 9 on the above-mentioned assets before January 1, 2018 and no differences occurred. Therefore, the book value is not impacted.
B. The investments classified as shares available for sale according to IAS 39 of the Group totaled $3,570,483 thousand and the shares yet to be listed that are measured at cost and limited partnership investments totaled $459,269 thousand. Therefore, as is required by IFRS 9, equity instruments not meant for the purpose of transaction are made an irreversible choice. The Group choses to designate all of them to be measured at fair value through other comprehensive income and then re-measured at fair value. Therefore, financial assets measured at fair value

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through other comprehensive income as of January 1, 2018 increased by $238,958 thousand and the net adjustment of the unrealized income of financial assets at fair value through other comprehensive income (including those belonging to uncontrolled equities) increased by $238,958 thousand. In addition, the Group already recognized impairment loss of investments in shares measured at cost and accumulated it under retained earnings according to IAS 39. Due to the fact that such shares were designated to be measured at fair value through other comprehensive income according to IFRS 9 and impairment would no longer be evaluated, however, the net adjustment in other equities - unrealized income of financial assets at fair value through other comprehensive income (including those belonging to uncontrolled equities) on January 1, 2018 dropped by $47,739 thousand and retained earnings after the adjustment showed an increase of $47,739 thousand (including those belonging to controlled equities).

International Financial Reporting Standard 15 "Revenue from Contracts with Customer” and related amendments

International Financial Reporting Standard 15 "Revenue from Contracts with Customer” replaces International Accounting Standard 11 "Construction Contracts", International Accounting Standard 18 "Revenue", and related interpretations and interpretation announcements.

As is required by the said standard, income shall be recognized as soon as the customer gains control over the product or service. When the customer is capable of taking charge of how the asset is used and acquiring nearly all residual benefits of the asset, it means that the customer has already gained control over the product or service.

A core principle of the standard is that “an enterprise recognizes income in order to describe the transfer of product or service committed to the customer. The value of such income reflects the considerations that the customers is expected to be entitled to in exchange for the said product or service.” According to the core principle, when an enterprise recognizes income, the following five steps need to be utilized in order to determine the time points and value recognized of the income:

(1) Identify contracts with customers;

(2) Identify implementation obligations as stated in the contract;
(3) Determine the transaction price;
(4) Split the transaction price to implementation obligations in the contract; and
(5) Recognize income upon fulfillment of implementation obligations.

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In addition, the standard also includes a set of integrated disclosure requirements that will make an enterprise to provide users of its financial statements with the nature, amount, timing, and uncertainty, among other comprehensive information, of the income and cash flows deriving from contracts with customer.

In addition, the “elaborations of International Financial Reporting Standard 15 ‘Revenue from Contracts with Customers’” amended to IFRS 15 clarify how to identify implementation obligations in the contract (that is, committed transfer of the product or service to the customer), how to determine that an enterprise is the handler (by providing the product or service) or the agent (responsible for arranging the provision of the product or service), and the decision over whether the income obtained through authorization should be recognized at a certain time point or within a certain period of time. Besides the above clarifications, the current amendment also covers two additional simplified requirements that help reduce the cost and complexity for an enterprise upon initial application of the standard.

Evaluation reveals that applying the above-mentioned standards and the results of its related amendments does not impact the Group’s consolidated financial standing and consolidated financial performance significantly except that more related disclosure information has to be provided. For details, please refer to Note 6 (36).

Expression of contract assets and contract liabilities

Because of the applicability of related requirements in IFRS 15, as agreed in the contract, the product or service is already transferred to the client. Rights for which considerations are collected unconditionally, however, are not available are listed under contract assets. Obligations for which considerations are already collected as agreed upon in the contract or are collectible from the customer and hence the product or service needs to be transferred to the client are listed as contract liabilities. Before they may be applicable under IFRS 15, they appear as advance payment on the Balance Sheet. The Group followed the requirements of IFRS 15 and modified accounting items appearing in the Balance Sheet on January 1, 2018. They are reclassified to contract liability from advance payment and the value was $43,930 thousand. In addition, as compared to the requirements under IAS 18, accounts receivable decreased as of December 31, 2018 by $60,364 thousand and the contract assets increased by $60,364 thousand. Advance payment dropped by $43,819 thousand and contract liabilities increased by $43,819 thousand.

International Accounting Standard 7: Revision of "Disclosure Initiative"

This revision requires that enterprises should disclose variations in liabilities

138

concerning (from) fund-raising activities, including cash and non-cash changes. After evaluation, such revision will increase the variation in liabilities from disclosure related to (from) fund-raising activities. For details, please refer to Note 6 (42).

(II) Impacts of not adopting newly released and revised International Financial Reporting Standards acceptable to the FSC:

According to the FSC Review No. 1070324857 order dated July 17, 2018 and the FSC Review No. 1070324155 order dated June 13, 2018 from the Financial Supervisory Commission, the Group shall adopt the applicable IFRSs released by the International Accounting Standards Board (hereinafter referred to as the "IASB") and approved by the FSC to be applicable in 2019 and the Regulations Governing Securities Issuers' Financial Statements while preparing financial statements.

The following summarizes the newly released, modified, and revised standards and interpretations approved by the FSC to be applicable in 2019:

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An effective date
The newly released/ modified/ revised guidelines and interpretations
released by the IASB
International Financial Reporting Standard 16 "Leases" January 1, 2019
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International Financial Reporting Standard 16 "Leases"	January 1, 2019
International Financial Reporting Interpretations Committee 23 “Uncertainty	January 1, 2019
over Income Tax Treatments”
International Financial Reporting Standard 9 Revision of “Prepayment	January 1, 2019
Features With Negative Compensation And Modifications Of Financial
Liabilities”
International Accounting Standard 28 Revision of “Long-term Interests in	January 1, 2019
Associates and Joint Ventures”
International Accounting Standard 19 Revision of “Plan Amendment,	January 1, 2019
Curtailment or Settlement”
Annual improvement of 2015-2017	January 1, 2019

International Financial Reporting Standard 16 "Leases"

International Financial Reporting Standard 16 "Leases" replaces International Accounting Standard 17 "Leases" and related interpretations and interpretation announcements. Such standard requires that the lessee shall recognize user right assets and lease liabilities (excluding leases with a term shorter than 12 months or involving low value target assets). The leaser accounting processes remain the same and are handled by the two types, operating lease and financing lease; only related disclosures are added.

139

The Group plans to follow the transitional requirements under IFRS 16 by choosing not to rearrange the comparative period and recognize the applicable retroactive conversion difference as part of the retained earnings on January 1, 2019.

For the time being, according to the agreement on the management of business leases according to IAS 17, lease liabilities as of January 1, 2019 will be discounted with the remaining lease payments by the incremental borrowing rate of interest for lessees on that day. All user right assets will be weighed with the value of the lease liabilities on that day, with the previously recognized advance payments or due lease payments adjusted.

The Group will apply the following appropriate practices in the measurement of user right assets and lease liabilities as of January 1, 2019:

For lease combinations with reasonable similar properties, a single discount rate is used to weigh lease liabilities.
Leases that are completed prior to December 31, 2019 will be treated as short-term leases.
Besides payment of the rent, incremental cost generated from the lease will not be included in the weighing of user right assets on January 1, 2019.
When weighing lease liabilities, the determination over the lease conditions (such as the lease period) will be based on expected conditions as of January 1, 2019.

According to the Group’s evaluation, by applying the new standard, it is expected that the above-mentioned difference might result in an increase in the user right assets and lease liabilities as of January 1, 2019 by NT$453,036 thousand, respectively. In addition, no major impacts are expected with regard to the accounting processes of the Group for the leader.

(III) Impacts of International Financial Reporting Standards already released by the IASB yet to be approved by the FSC:

The Group is not adopting the following IFRSs released by the IASB yet to be approved by the FSC; the actual applicability effective date is based on the requirements of the FSC.

The newly released/ modified/ revised guidelines and interpretations

International Financial Reporting Standard 3 Revision of “Definition of a Business” International Accounting Standard 1 & 8 Revision of “Definition of. Material” International Financial Reporting Standard 17 “Insurance Contracts” International Financial Reporting Standard 10 & International Accounting Standard 28 Revision of “Sale or contribution of assets between and investor and its associate or joint venture”

An effective date released by the IASB

January 1, 2020 January 1, 2020 January 1, 2021 Waiting for the decision of IASB

140

According to preliminary evaluation, by applying the above-mentioned standards and interpretations, it will not result in major impacts on the Group’s consolidated financial standing and consolidated financial performance. The Group will continue to evaluate related impact values and will disclose them once evaluation is completed.

IV. Summary and Descriptions of Major Accounting Policies

Major accounting policies adopted while this consolidated financial statement is compiled are summarized as follows. Unless specified otherwise, such policies consistently apply to all reporting periods.

(I) Compliance Statement

This consolidated financial statement is prepared in accordance with the Regulations Governing Securities Issuers' Financial Statements and the IFRSs approved and released to take effect by the FSC.

(II) Compilation Basis

1.Except for the important items below, this consolidated financial statement is compiled according to historical cost:
- (1) Financial assets and liabilities at fair value through profit or loss measured at fair value
- (2) Financial assets at fair value through other comprehensive income measured at fair value/financial assets available for sale
- (3) Liabilities of payment agreement on the basis of cash delivered shares measured at fair value
- (4) Defined benefit liabilities recognized according to the net worth of pension fund assets with the current value of defined benefit obligations removed
Compiling financial statements meeting IFRSs requires some important accounting estimates. While the accounting policy of the Group is applied, it also relies on the management to apply their judgment over items that involve a high level of judgment or complexity or involve major assumptions and estimates of the consolidated financial statement. Please refer to Note 5 for the descriptions.
The Group traces back to apply IFRS 9 and IFRS 15 for the first time on January 1, 2018 and chooses not to rearrange the financial statements and notes during the 2017 comparative period and recognizes conversion difference as the retained earnings or other equities on January 1, 2018. The financial statements and notes during the 2017 comparative period are compiled according to IAS 39, IAS 18, and related interpretations and interpretation announcements.

141

(III) Consolidation Basis

Principles for Compiling Consolidated Financial Statement
(1) The Group includes all subsidiaries as entities in the compilation of the consolidated financial statement. Subsidiaries are entities controlled by the Group (including structural entities). When the Group is exposed to the variable compensation from participation in an entity or is entitled to the said variable compensation and is capable of impacting the compensation through its power over the entity, the Group has control over the entity. Subsidiaries are included in the consolidated financial statement as soon as the Group gains control and consolidation is terminated on the date when the control is lost.
(2) Transactions, balance, and unrealized income between companies within the Group have been written off. Necessary adjustments have been made to the accounting policy of the subsidiaries to be consistent with the policy adopted by the Group.
(3) Profits and losses and respective components of other comprehensive income belong to the parent company’s client and uncontrolled equities. The total comprehensive income also belongs to the parent company’s client and uncontrolled equities even if balance of deficits occurs to uncontrolled equities as such.
(4) If the variance in the shares held in a subsidiary results in loss of control (and transaction of uncontrolled equities), it is handled as transaction of equities; that is, it is considered as transactions with the client. The difference between the adjusted value of uncontrolled equities and the fair value of paid or collected considerations is recognized directly as equities.
(5) When the Group loses control over the subsidiary, the remaining investments in the said former subsidiary are re-measured at fair value and serve as the fair value of financial assets originally recognized or the cost of investments in the affiliates or joint ventures originally recognized. The difference between the fair value and the book value is recognized as the profits and losses for the current term. For all values previously recognized as part of other comprehensive income that are related to the said subsidiary, the accounting process, if with the same basis as the direct disposition of related assets or liabilities by the Group, that is, just as the interest or loss previously recognized as part of the comprehensive income, will be re-categorized as profits and losses upon disposal of related assets or liabilities. In this case, when control over the

142

subsidiary is lost, such interest or loss is re-categorized from equities to profits and losses.

2. Subsidiaries included in the consolidated financial statement are as follows:

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Name of Holding ratio or funding
Name of subsidiary Nature of operations
investing 12/31/2018 12/31/2017
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Name of investing	Name of subsidiary	Nature of operations	Holding ratio 12/31/2018	or funding 12/31/2017
Grand Pacific	GPPC Chemical	Production and distribution of	100.00%	100.00%
Petrochemical	Corporation	collision-resistant and
C i Grand Pacific	GPPC Investment	fl i General investment	81.60%	81.60%
Petrochemical	Corporation
C ti Grand Pacific	Land & Sea Capital	Investment Business	100.00%	100.00%
Petrochemical	Corp.
C ti Grand Pacific	GOLDENPACIFIC	Investment Business	100.00%	100.00%
Petrochemical	EQUITIES
C ti Grand Pacific	LTD C ti Videoland Inc.	General imports and exports	62.29%	62.29%
Petrochemical		trading, production of
Corporation		broadcasting and TV
		programs, re-production of
Grand Pacific	KK Enterprise	d i d i i l Production, manufacturing,	15.73%	15.73%
Petrochemical		and distribution, wholesale,
Corporation		packaging materials, various
GPPC	GPPC Hospitality and	Catering	100.00%	-
Investment	Leisure Inc.
Corporation
Videoland Inc.	GPPC Investment	General investment	18.40%	18.40%
	Corporation
Videoland Inc.	KK Enterprise	Production, manufacturing,	33.79%	33.79%
		and distribution, wholesale,
		packaging materials, various
Videoland Inc	Videoland Holding	Investment Business	-	100.00%
	Limited
KK Enterprise	K.K. Chemical	Trademark paper and tape, etc.	49.90%	49.90%
	Company Limited
KK Enterprise	Zhongshan KK	Trademark paper and tape, etc.	50.00%	50.00%
	Adhesion Product
KK Enterprise	Kunshan KK Adhesion	Trademark paper and tape, etc.	100.00%	100.00%
	Product Corporation
KK Enterprise	Dragon King Inc.	Re-investment Business	100.00%	100.00%
KK Enterprise	KK Enterprise	Trademark paper and tape, etc.	70.00%	70.00%
	(Malaysia) Sdn. Bhd.

Note: (1) Because the Company’s direct and indirect holding ratios of the subsidiary both exceed 50% or the Company has substantial control over the subsidiary, the subsidiary is included in the consolidated financial statement.

(2)Among the above-mentioned consolidated entities, the financial statement about K.K. Chemical Company Limited and KK Enterprise (Malaysia) Sdn. Bhd. was audited and certified by other CPAs.

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Variation in the increase and decrease of companies among the entities in the compiled consolidated financial statement of the current term.
(1) GPPC Investment Corporation reinvested in October 2018 and established the subsidiary, GPPC Hospitality and Leisure Inc.. The Group holds direct and indirect shares and has control over the subsidiary. Therefore, starting from the date when the control was gained, the subsidiary’s income and expenses have been included in the consolidated financial statement.
(2) For the purpose of streamlining the investment framework, Videoland Inc. canceled its investment in Videoland Holding Limited in August 2018 and remitted back all remaining properties. Therefore, since the date when it lost control, the company’s income and expenses have been included as part of the consolidated financial statement.
Subsidiaries not included in the consolidated financial statement: None.
Different adjustment and processing methods during the accounting period of the subsidiary: None.
The ability of the subsidiary to transfer funds to the parent company is significantly restricted and the nature and extent of such restriction:
Among the cash and bank deposits as of December 31, 2017 and 2018, there are $132,048 thousand and $120,722 thousand in China and under local foreign exchange control. Such foreign exchange control restricts remittance of funds out of China (unless through normal share dividends).
Subsidiaries with major uncontrolled equities for the Group
The uncontrolled equities of the Group as of December 31, 2018 and 2017 were $2,881,984 thousand and $2,765,917 thousand, respectively. The following is the information of subsidiaries with major uncontrolled equities for the Group:
(1) December 31, 2018 and January 1 through December 31, 2018

Name of subsidiary Videoland Inc. and subsidiary company KK Enterprise and subsidiary company Total	Ratio of non-controlling shareholders 37.71% 50.48%	Uncontrolled Equity $ 2,266,152 615,832 $ 2,881,984	Profits and losses to non-controlling interests
			$ 151,505 39,130 $ 190,635

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(2) December 31, 2017 and January 1 through December 31, 2017

Name of subsidiary Videoland Television Network and subsidiary company KK Enterprise and subsidiary company Total	Ratio of non-controlling shareholders 37.71% 50.48%	Uncontrolled Equity $ 2,159,720 606,197 $ 2,765,917	Profits and losses to non-controlling interests
			$ 126,747 32,261 $ 159,008

(3) For the information of the main operation site and the country where each of the

above-mentioned subsidiaries is registered, please refer to Note 10 (1)(2)-10 for details.

(4) Overview of financial information of subsidiaries:

 Balance Sheet

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Videoland Inc. and subsidiary company
Item December 31, 2018 December 31, 2017
Current Assets $ 2,105,054 $ 1,619,498
Non-current Assets 4,369,200 4,510,055
Current Liabilities ( 441,635) ( 377,314)
Non-current Liabilities ( 23,199) ( 25,059)
Equities $ 6,009,420 $ 5,727,180
KK Enterprise and subsidiary company
Item December 31, 2018 December 31, 2017
Current Assets $ 961,061 $ 970,537
Non-current Assets 571,528 622,450
Current Liabilities ( 292,366) ( 371,194)
Non-current Liabilities ( 114,243) ( 107,696)
Equities $ 1,125,980 $ 1,114,097
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 Comprehensive Income Statement

Videoland Television Network and subsidiary

Comprehensive Income State	ment Videoland Television Network and subsidiary	ment Videoland Television Network and subsidiary
Item Operating revenue Net Profits of Current Term Other Comprehensive Income Total of Comprehensive Income Comprehensive Income Total Belongs to Uncontrolled Equity: Paid Uncontrolled Equity Dividend	company
	January 1 to December 31, 2018 $ 2,299,327 401,764 ( 96,266) $ 305,498 $ 115,203 $ 21,519	January 1 to December 31, 2017
		$ 2,531,185
		336,109 168,031
		$ 504,140
		$ 190,111 $ 21,519

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Item Operating revenue Net Profits of Current Term Other Comprehensive Income Total of Comprehensive Income Comprehensive Income Total Belongs to Uncontrolled Equity: Paid Uncontrolled Equity Dividend	KK Enterprise and subsidiary company	KK Enterprise and subsidiary company
	January 1 to December 31, 2018 $ 1,775,236 66,230 ( 7,593) $ 58,637 $ 34,531 $ 24,897	January 1 to December 31, 2017
		$ 1,643,053
		56,999 ( 1,644)
		$ 55,355
		$ 31,349 $ 19,097

 Statement of Cash Flows

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Videoland Inc. and subsidiary company
January 1 to December 31, January 1 to December
Item
2018 31, 2017
Net Cash In-flows from Operating
$ 1,297,585 $ 1,362,882
Activities
Net Cash Out-flows from Investment
( 1,038,520) ( 1,277,950)
Activities
Net Cash Out-flows from Fundraising
( 57,054) ( 57,058)
Activities
－－
Impact on a change in the exchange rate
Increase in Cash and Cash Equivalents
202,011 27,874
of Current Term
Balance of Cash and Cash Equivalents
672,438 644,564
in Beginning of Term
Balance of Cash and Cash Equivalents
$ 874,449 $ 672,438
at End of Term
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KK Enterprise and subsidiary company
January 1 to December 31, January 1 to December
Item
2018 31, 2017
Net Cash In-flows from Operating
$ 88,236 $ 209,224
Activities
Net Cash Out-flows from Investment
( 23,201) ( 35,073)
Activities
Net Cash Out-flows from Fundraising
( 81,500) ( 158,329)
Activities
Impact on a change in the exchange rate ( 4,115) ( 3,783)
Increase (decrease) in Cash and Cash
( 20,580) 12,039
Equivalents of Current Term
Balance of Cash and Cash Equivalents
244,814 232,775
in Beginning of Term
Balance of Cash and Cash Equivalents
$ 224,234 $ 244,814
at End of Term
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(IV) Conversion of foreign currencies

Items listed in the financial statement of each entity within the Group are weighed by the currency (that is, the functional currency) in the main economic setting where the entity operates. This consolidated financial statement is expressed in the

146

Company’s functional currency, that is, the New Taiwan Dollar.

When preparing each individual financial statement, if the currency (foreign currency) used in the transaction is not the functional currency, it shall be documented in the functional currency converted according to the spot exchange rate on the day of transaction or measurement. The conversion difference generated from such transaction is recognized as the income for the current term. At the end date of the reporting period, the balance of foreign currency monetary assets and liabilities is valued and adjusted according to the spot exchange rate on the balance sheet date. The conversion difference generated as a result of adjustment is recognized as profits and losses for the current term. The balance of foreign currency non-monetary assets and liabilities is valued and adjusted according to the spot exchange rate on the balance sheet date. When it is measured at fair value through profit or loss, the exchange difference generated as a result of adjustment is recognized as profits and losses for the current term. If it is measured at fair value through comprehensive income, the resultant exchange difference, on the other hand, is recognized as part of other comprehensive income. If it is not measured at fair value, the historical exchange rate on the initial transaction date will be adopted for the measurement. All profits or losses from exchange are recognized and reported as other interest and loss in the comprehensive income statement according to the nature of transaction.
When preparing the consolidated financial statement, assets and liabilities of overseas operating institutions of the consolidated company (including subsidiaries, affiliates, joint ventures, or branches in countries or using currencies different from those of the Company) were converted to New Taiwan Dollar according to the spot exchange rate on the date shown on each balance sheet date; income and expenses are converted with the mean exchange rate of the current term. All the exchange differences generated as a result of conversion are recognized as other comprehensive income.
When disposition of an overseas operating institution results in the loss of control, shared control, or major impacts of the said overseas operating institution, all the equities having to do with the said institution are to be re-classified as income. When partial disposition of a subsidiary of the overseas operating institution does not result in loss of control in the subsidiary, the accumulated exchange difference recognized under other comprehensive income is included as part of equity transactions proportionally and is calculated as such; it, however, will not be 147

recognized as profits and losses. When partial disposition of affiliates or joint ventures of the overseas operating institution does not result in major impacts such as loss of equity or joint control over the said affiliate or joint venture, the accumulated exchange differences recognized under other comprehensive income are reclassified according to the disposition ratio as profits and losses.

(V) Criteria for differentiating assets and liabilities between current and non-current
Assets meeting one of the following criteria are categorized as current assets:
(1) Assets that are expected to be realized or are intended to be sold or consumed within a normal business cycle;
(2 ) Those held for trading purpose
(3) Those expected to be realized within 12 months after the balance sheet date
(4) Cash or cash equivalents, excluding those meant for exchange, to pay off debts, or under other restrictions in more than 12 months after the balance sheet date.
The Group classifies all the assets not meeting the above criteria as non-current assets:
Liabilities meeting one of the following criteria are categorized as current liabilities:
(1) Liabilities that are expected to be paid off within a normal business cycle
(2 ) Those held for trading purpose
(3) Liabilities that are expected to expire and be paid off within 12 months after the balance sheet date
(4) Liabilities whose payment deadline cannot be unconditionally extended to at least 12 months after the balance sheet date. Provisions for liabilities may be based on the counter party's choice. When equity instruments are issued to lead to pay-off, the categorization is not affected.
The Group classifies all the liabilities not meeting the above criteria as non-current liabilities:

(VI) Cash and cash equivalents

Cash and cash equivalents include inventory cash, bank deposits, and short-term and highly liquid investments that may be converted to a fixed amount of cash at any time at minimal risk associated with the change in value. Time deposits meeting the definition above and whose purpose is to satisfy short-term operational cash commitment are classified as cash equivalents.

(VII) Financial Instruments

Financial assets and financial liabilities are to be recognized when the Group

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becomes a party to the terms and conditions in the specific financial instrument contract.

When recognized initially, financial assets and financial liabilities are measured at fair value. Upon initial recognition, transaction costs that may be attributed directly to the acquisition or release of financial assets and financial liabilities (excluding financial assets and financial liabilities classified to be measured at fair value through profit or loss) shall be added to or deducted from the fair value of the said financial assets or financial liabilities. The transaction cost that may be directly attributed to the acquisition or release of financial assets or financial liabilities measured at fair value through profits and losses, on the other hand, is recognized as profits and losses immediately.

(VIII) Financial assets measured at fair value

2018

Financial assets at fair value through profit or loss include those mandated to be measured at fair value through profit or loss and those designated to be measured at fair value through profit or loss. Financial assets mandated to be measured at fair value through profit or loss include investments in equity instruments not designated by the Group to be measured at fair value through other comprehensive income and investments in liability instruments not qualified to be measured at post-amortized cost or at fair value through other comprehensive income.
For financial assets that are measured at post-amortized cost or at fair value through other comprehensive income, when they may be eliminated or when major decreases are measured or recognized differently, the Group designates them upon initial recognition to be financial assets at fair value through profit or loss.
For financial assets measured at fair value through profit or loss in compliance with the transaction practice of the Group, transaction date accounting is adopted.
Upon initial recognition, the Group measures them at fair value; related transaction costs are recognized as part of profits and losses and subsequently measures them at fair value, with the interest or loss recognized as part of profits and losses.
When the right to collect dividends is defined and economic benefits associated with dividends are likely to flow in and the value of such dividends can be reliably measured, the Group recognizes income from dividends as part of profits and losses.

2017

Financial assets at fair value through profit or loss include those held to be traded

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and those designated upon initial recognition to be measured at fair value through profit or loss. If financial assets are meant mainly to be sold within a short term at the time they are acquired, they are classified as financial assets held to be traded. For derivatives, except for those designated to be hedging items according to hedge accounting, all are classified as financial assets held to be traded. When financial assets meet one of the following criteria, the Group designates them to be measured at fair value through profit or loss upon initial recognition:

(1) Mixed (combined) contract; or
(2) May be eliminated or major decreases are measured or recognized differently; or
(3) Investments whose performance is managed and evaluated on the basis of fair value according to written risk management or investment strategies
For financial assets measured at fair value through profit or loss in compliance with the transaction practice of the Group, transaction date accounting is adopted.
Financial assets at fair value through profit or loss are measured at fair value upon initial recognition; related transaction costs, on the other hand, are recognized as part of profits and losses for the current term. They are measured subsequently at fair value, with the variation in fair value recognized as part of profits and losses for the current term. For publicly quoted investments in equity instruments with no active market or derivatives linked to such publicly quoted investments in equity instruments with no active market hence requiring delivery of such equity instruments upon settlement, when the fair value cannot be reliably measured, the Group lists them as “financial assets carried at cost.”
(IX) Financial assets at fair value through other comprehensive income (applicable to 2018)
Upon initial recognition, an irreversible choice is made to list variation in fair value of investments in equity instruments not held to be traded under other comprehensive income or investments in liability instruments meeting all of the criteria below:
- The financial assets are held under the operation model for the purpose of collecting contract cash flows and for sale.
- (2) The cash flows generated on specific dates from terms and conditions of the contract are completely meant to pay for the principal and the interest of the principal in circulation.
(2) For financial assets at fair value through other comprehensive income that meet the transaction practice in the Group, transaction date accounting is adopted.
Upon initial recognition, the Group measures at fair value plus transaction cost and subsequently measures at fair value:

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  - (1) Variation in fair value of equity instruments is recognized under other comprehensive income. Upon de-recognition, the accumulated interest or loss previously recognized under other comprehensive income may not be re-categorized later to profits and losses; instead, it is re-recognized under retained earnings. When the right to collect dividends is defined and economic benefits associated with dividends are likely to flow in and the value of such dividends can be reliably measured, the Group recognizes income from dividends as part of profits and losses.

  - (2) Variation in fair value of liability instruments is recognized under other comprehensive income. Impairment loss, interest income, and profit or loss from foreign exchange prior to de-recognition are recognized as part of profits and losses. Upon de-recognition, accumulated interest or loss previously recognized under other comprehensive income will be re-categorized from equities to profits and losses.

(X) Financial assets at post-amortized cost (applicable to 2018)
The following criteria have to be fulfilled at the same time:
- (1) The financial assets are held under the operation model for the purpose of collecting contract cash flows.
- (2) The cash flows generated on specific dates from terms and conditions of the contract are completely meant to pay for the principal and the interest of the principal in circulation.
For financial assets at post-amortized cost that meet the transaction practice, the Group adopts the transaction date accounting.
1. Upon initial recognition, the Group measures at fair value plus transaction cost and subsequently interest income and impairment loss are recognized during the circulation period adopting the effective interest method according to the amortization procedure. Meanwhile, upon de-recognition, the interest or loss is recognized as part of profits and losses.
The time deposits disqualified as cash equivalents held by the Group, due to the short duration involved and the insignificant impacts upon cashing, are measured at investment value.

(XI) Accounts and notes receivable (applicable to 2018)

They are the accounts and notes already collected unconditionally as a result of transfer of products or service in exchange for considerable values as agreed upon in the contract. They are short-term accounts and notes receivable without interest. Due to the fact that impacts from cashing are minimal, the Group measures them at the

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initial invoiced value.

(XII) Loans and accounts receivable (applicable to 2017)

Loans and accounts receivables generated initially are accounts receivable from customers generated as a result of selling products or providing service during normal business process. They are measured at fair value upon initial recognition and at the value subsequently adopting the effective interest method with impairment deducted from the post-amortized cost. They are short-term accounts receivable without interest. Due to the fact that impacts from cashing are minimal, they are subsequently measured at the initial invoiced value.

(XIII) Financial assets available for sale (applicable to 2017)

Financials available for sale are non-derivative financial assets available for sale or yet to be classified into any other category.
For financial assets available for sale in compliance with the transaction practice, the Group adopts transaction date accounting.
Upon initial recognition, the Group measures financial assets available for sale at fair value plus transaction cost and subsequently measures at fair value. The variation in fair value is recognized under other comprehensive income. For publicly quoted investments in equity instruments with no active market or derivatives linked to such publicly quoted investments in equity instruments with no active market hence requiring delivery of such equity instruments upon settlement, when the fair value cannot be reliably measured, the Group lists them as “financial assets carried at cost.”
(XIV) Impairment of financial assets
2018

On each balance sheet date, the Group considers all reasonable supporting information (including prospective information) regarding other investments in liability instruments at fair value through other comprehensive income and financial assets measured at post-amortized cost and accounts receivable consisting of major financial components or contract assets, leases receivable, loan commitment, and financial guarantee contracts and measures allowance loss according to the 12-month expected credit loss for those without an significant increase in credit risk after initial recognition. For those with a significant increase in credit risk after initial recognition, on the other hand, the allowance loss is measured according to the expected credit loss for the duration. For accounts receivable or contract assets without major financial components, the allowance loss is measured according to the expected credit loss for

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the duration.

2017

On each balance sheet date, the Group evaluates whether or not any objective evidence of impairment exists already to show that a certain financial asset or a set of financial assets experienced one or multiple events (that is loss events) after initial recognition and that the loss events have impacts that may be reliably estimated on the estimation of future cash flows of a certain financial asset or a set of financial assets.
The policy adopted by the Group in deciding whether or not an objective evidence of impairment loss exists is as follows:
(1) Major financial difficulties facing the issuer or the debtor;
(2) Default, such as delinquency in paying or failure to pay interest on the principal;
(3) Concession originally not considered given by the Group to the debtor for economic or legal causes related to the financial difficulties experienced by the debtor;
(4) Increased possibility for the debtor to declare bankruptcy or to begin another financial restructuring;
(5) Disappearance of active market for the said financial asset due to financial difficulties;
(6) Measurable decrease in the estimated cash flows in the future for a set of financial assets after initial recognition of the said assets. Despite the fact that such decrease is yet to be determined to be associated with a certain individual financial asset in the set, such data include undesirable changes in the payment status of the debtor for the set of financial assets or national or regional economic status related to breach of contract for assets in the set of financial assets;
(7) Information on major changes that have occurred in the technical, market, or regulatory settings where the issuer operates with undesirable impacts and evidence showing that it is likely impossible to recover the cost of investments in the said equities; or
(8) Significant or persistent decline in the fair value of investments in equity instruments to a level below the cost
When it is evaluated by the Group that objective evidence of impairment exists and impairment loss has occurred, it shall be handled according to each of the following

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categories:

(1) Loans and accounts receivable

Impairment loss is recognized as part of profits and losses for the current term with the difference between the book value of the asset and the current value of estimated cash flows in the future discounted according to the original effective interest of the said financial asset. When the value of impairment loss decreases subsequently and such decrease may be objectively linked to events after the impairment is recognized, the impairment loss previously recognized, without recognizing the impairment, is reversed under the profits and losses of the current term within the expected limit of post-amortized cost on the date of reversal. The value of impairment loss recognized and reversed is reflected in the adjustment of the book value of assets in the contra account.

(2) Financial assets available for sale

They are re-categorized from other comprehensive income to profits and losses of the current term after impairment loss previously included as part of profits and losses of the financial asset is deducted from the difference between the cost of acquiring the asset (with the paid principal and amortized value deducted) and the current fair value. For investments in liability instruments, when the fair value increases subsequently and the increase can be objectively linked to events that occur after impairment loss is recognized, such impairment loss is reversed as profits and losses of the current term. For equity instrument investments, impairment loss already recognized as income may not be reversed through income of the current term. The value of impairment loss recognized and reversed is reflected in the adjustment of the book value of assets in the contra account.

(3) Financial assets carried at cost

(XV) De-recognition of Financial Assets
When one of the following conditions is fulfilled, the Group will de-recognize financial assets:
The contract right to collect cash flows from financial assets has expired.

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The contract right to collect cash flows from financial assets has been transferred and nearly all risks and rewards associated with the ownership of financial assets have been transferred.
The contract right to collect cash flows from financial assets has been transferred and control over financial assets is not retained.
(XVI) Rents/Businesses Leases Receivable (Leaser)
1.According to the conditions of the lease contract, when nearly all risks and rewards associated with ownership of lease have been transferred to be borne by the lessee, it is categorized as financing lease.
(1) In the beginning of a lease, it is recognized as “rents receivable” according to the net worth of investments in the lease (including the initial direct cost). The difference between the total value of rents receivable and the current value is recognized as “unearned financing income of a financing lease.”
(2) Subsequently, on a systematic and reasonable basis, financing income is amortized within the lease period in order to reflect the fixed return on the net worth of the investment in the lease held by the leaser.
(3) The lease payments relevant to the period (excluding service cost) offsets the total value of investment in the lease in order to reduce the principal and the unearned financing income.
2.With any incentive given to the leaser deducted, the business lease income is amortized and recognized as part of profits and losses for the current term with the straight line method within the lease period.
(XVII) Inventory

Inventory is measured by the cost or the net realizable value, whichever is lower. The perpetual inventory system is adopted. The cost is determined by the weighted average method. The cost of finished products and in-process products includes the cost of raw materials, direct manpower, other direct costs, and production-related manufacturing expenses (amortized according to normal throughput), excluding borrowing cost. In the comparison of whether or not the cost or the net realizable value is lower, the item by item method is adopted. Net realizable value refers to the balance after the estimated cost yet to be devoted till completion and related variable selling expenses are deducted from the estimated selling price during a normal business process.

(XVIII) Investments adopting the equity method/Affiliates

Affiliates refer to entities on which the Group has a major influence yet no control, which generally means holding of at least 20% of shares with voting rights directly

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or indirectly. The Group adopts the equity method when handling investments in affiliates. Upon acquisition, they are recognized by the cost, including the good will already identified upon acquisition, with any accumulated impairment loss estimated to occur subsequently deducted.

The share of profits or losses for the Group after acquisition of an affiliate is recognized as part of profits and losses for the current term and the share of other comprehensive income after acquisition is recognized as part of other comprehensive income. If the share of losses borne by the Group in any affiliate equals to or exceeds its equity in the said affiliate (including any other unsecured receivables), the Group does not recognize further losses, unless legal obligations or constructive obligation have occurred for the Group in the said affiliate or the Group has made the payment on behalf of the affiliate.
Profits and losses from downstream, upstream, and side-stream transactions between the Group and the affiliate are recognized in the financial statement only when they are within the scope irrelevant to the equity that the Company has in the affiliate. Necessary adjustments have been made to the accounting policy of the affiliate to be consistent with the policy adopted by the Group.
When affiliates experience equity changes that are not profits and losses or other comprehensive income in nature and that do not have an effect on the holding ratio in the affiliate, the Group will recognize equity changes that are part of the shares that the Group is entitled to in the affiliate according to the holding ratio as capital reserve.
When the affiliate increases the number of new shares issued, if the Group fails to subscribe or acquire them proportionally to result in a variation in the investment ratio, the increase and decrease in the variation in the net worth of the stock option is to adjust the capital reserve and the investments accounted for using the equity method. If it results in a decreased investment ratio, besides the above-mentioned adjustment, the interest or loss that has to do with the decrease in the ownership equity and previously recognized under other comprehensive income and needs to be re-categorized as part of profits and losses upon disposition of related assets or liabilities is re-categorized as part of profits and losses according to the decrease ratio.
When the Group loses its major influence on the affiliate and the remaining investment in the affiliate is re-measured at fair value, the difference between the fair value and the book value is recognized as profits and losses for the current term.

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When the Group disposes of an affiliate, if it loses major influence on the affiliate, for all values previously recognized as part of other comprehensive income that are related to the said affiliate, the accounting process, if with the same basis as the direct disposition of related assets or liabilities by the Group, that is, just as the interest or loss previously recognized as part of the comprehensive income, will be re-categorized as profits and losses upon disposal of related assets or liabilities. In this case, when major influence over the affiliate is lost, such interest or loss is re-categorized from equities to profits and losses. If there is still a major influence on the affiliate, only the amount previously recognized under other comprehensive income is transferred out in accordance with the above-mentioned way proportionally.
When the Group disposes of an affiliate, if the major influence on the affiliate is lost, capital reserve related to the affiliate will be transferred to be profits and losses. If there is still a major influence on the affiliate, on the other hand, it will be transferred to be recognized as part of profits and losses proportionally to the disposition.
(XIX) Real estate, plants and equipment
Real estate, plants, and equipment are booked on the basis of the acquisition cost and related interest during the construction period is capitalized.
The subsequent cost will only be included as part of the book value of assets or recognized as a single asset when the future economic benefits related to the item are very likely to flow into the Group and the cost of such item can be reliably measured. The book value of the restored portions shall be de-recognized. All the other maintenance costs are recognized as part of profits and losses for the current term at the time of occurrence.
The cost model is adopted during subsequent measurements of real estate, plants and equipment. Except for land for which depreciation is not recognized, depreciation is recognized with the straight line method according to the estimated durability. If respective components of real estate, plants and equipment are significant, depreciation is recognized separately.
The Group reviews the residual value, durability, and depreciation method of respective assets on the end date of each fiscal year. If the expected residual value and durability differ from previous estimates or if there are already major changes to the expected consumption pattern of future economic benefits integral of the assets, the requirements for accounting estimate changes in International

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Accounting Standard 8. Accounting Policies, Changes in Accounting Estimates, and Errors will be followed starting from the date when the changes occur. Durability of each asset is as follows:

(1) House and Building 4 ～ 56 years
(2) Machinery and Equipment 5 ～ 25 years
(3) Transport Equipment 2 ～ 7 years
(4) Other Equipment 3 ～ 10 years
1. Some depreciable assets of the Group were originally declared during taxation adopting the fixed percentage of declining method. The Group, however, changed it to the average method in 1998. This change was approved by the National Tax Administration of Southern Taiwan Province, Ministry of Finance through its (1998) STP Review (I) No. 87051967 letter with records on file.
(XX)Lease Assets/Business Lease (Lessee)
- 1.According to the conditions of the lease contract, when nearly all risks and rewards associated with ownership of lease have been transferred to be borne by the Group, it is categorized as financing lease.
- (1) In the beginning of a lease, the lower of the fair value and the current payable value of minimum rent of lease assets is recognized under assets and liabilities.
- (2) Subsequent minimum payable rents are assigned to the financial cost and to decrease liabilities yet to be paid. The financial cost is amortized by each term during the lease period in order to fixate the interest rate for the period calculated according to the balance of the liabilities.
- (3) Real estate, plants and equipment acquired under financing lease are recognized for depreciation according to the durability of the asset. If it cannot be reasonably confirmed that the Group will acquire the ownership upon expiration of the lease period, the shorter of the durability and the lease period of the said asset is recognized for depreciation.
- With any incentive given to the leaser deducted, the business lease income is amortized and recognized as part of profits and losses for the current term with the straight line method within the lease period.

(XXI)Investment Real Estate

Investment real estate is the real estate held for earning the rent or capital appreciation or both and also includes real estate held for the time being with the future purpose yet to be determined. Investment real estate is measured at acquisition cost and later by the value with their cost minus accumulated depreciation and accumulated impairment

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loss. Except for land, depreciation is recognized with the straight line method according to the estimated durability. The durability is 40 years. Upon de-recognition of investment real estate, the difference between the net value from the disposal and the book value of the specific asset is recognized as profits and losses for the specific term.

(XXII)Intangible Assets

Separate Acquisition
Intangible assets that are acquired alone with limited durability are originally recognized by their cost and later by the value with their cost minus accumulated depreciation and accumulated impairment loss. Intangible assets within the durability period are amortized on the straight-line basis. The Group reviews at least on the end date of each year the estimated durability, residual value, and amortization method and postpone impacts where changes in accounting estimates apply. Upon de-recognition of intangible assets, the difference between the net value from the disposal and the book value of the specific asset is recognized as profits and losses for the specific term.
Good Will
The goodwill obtained from corporate consolidation is based on the amount of goodwill recognized on the acquisition date as the cost and is subsequently measured by the value after accumulated impairment loss is deducted from the cost. For the sake of impairment testing, the good will needs to be amortized to the various cash generating units or the group of cash generating units within the Group expected to benefit from the synergistic effect of the said consolidation.

(XXIII) Program Broadcasting Cost

The program broadcasting cost includes the prices paid to purchase externally the broadcasting right of films, outsourced production of films, or self-production of programs and the manufacturing expenses with economic benefits in the future; all are booked on the basis of the actual cost. Externally purchased broadcasting right of films is based on the respective program and is amortized among films recognized under operating cost for the current time at the time when they are actually played. The broadcasting right of re-authorized films is transferred to be the re-authorization cost of films recognized under operating cost for the current term upon actual delivery. Investments in outsourced production of films and self-production of programs, on the other hand, are transferred to be the manufacturing expenses and film-making cost under operating cost for the current term upon actual broadcasting. The cost of

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broadcasting programs is listed under other non-current assets and is expected to be transferred to be under other current assets. At the end of a term, if evaluation shows that the fair value is below the booked cost yet to be amortized, the impairment amount, on the other hand, will be recognized under profits and losses for the current term.

(XXIV)Impairment of Non-financial Assets

The Group estimates the recoverable amount for assets with signs of impairment on the balance sheet date. When the recoverable amount is below the book value, on the other hand, the impairment loss is recognized. The recoverable amount refers to the result of the fair value of an asset less the disposal cost or the use value, whichever is higher. Besides good will, when impairment of assets already recognized from the previous year no longer exists or decreases, the impairment loss is reversed. The book value of assets increased due to impairment loss from reversal, however, does not exceed the book value of the asset less depreciation or amortization on the condition that impairment loss is not recognized.

(XXV) Loans

Loans are measured by the results after the transaction cost is deducted from the fair value upon initial recognition. Subsequently, for any difference between the value with the transaction cost deducted and the redemption value, the effective interest method is adopted for measurement within the loan period according to the post-amortized cost.

(XXVI) Accounts and Notes Payable

Accounts and notes payable are the payment obligations upon acquisition of goods or service from the supplier during a normal business process. They are measured at fair value upon initial recognition and at the value subsequently adopting the effective interest method according to the post-amortized cost. They are short-term accounts payable without interest. Due to the fact that impacts from cashing are minimal, they are subsequently measured at the initial invoiced value.

(XXVII) Financial liabilities at fair value through profit or loss

2018
They are the financial liabilities available for transaction whose main purpose is to be sold or bought back within the short term, excluding derivatives that are designated to be hedging tools according to hedge accounting. Financial liabilities designed to be measured at fair value through profit or loss. When financial liabilities meet one of the following criteria, the Group designates them to be measured at fair value through profit or loss upon initial recognition:

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(1) Mixed (combined) contract; or
(2) May be eliminated or major decreases are measured or recognized differently; or
(3) Instruments whose performance is managed and evaluated on the basis of fair value according to written risk management policies
Upon initial recognition, the Group measures them at fair value; related transaction costs are recognized as part of profits and losses and subsequently measures them at fair value, with the interest or loss recognized as part of profits and losses.
For financial liabilities designated to be measured at the fair value through profit or loss, however, if the changes in the fair value have to do with credit risk, unless it is required to recognize them under profits and losses in order to prevent against inappropriate distribution accounting ratios or as part of a loan commitment and financial guarantee contract, they are recognized under other comprehensive income.

2017

Financial liabilities at fair value through profit or loss include those held to be traded and those designated upon initial recognition to be measured at fair value through profit or loss. They are the financial liabilities available for transaction whose main purpose is to be sold or bought back within the short term at the time of acquisition, excluding derivatives that are designated to be hedging tools according to hedge accounting. When financial liabilities meet one of the following criteria, the Group designates them to be measured at fair value through profit or loss upon initial recognition:
(1) Mixed (combined) contract; or
(2) May be eliminated or major decreases are measured or recognized differently; or
(3) Instruments whose performance is managed and evaluated on the basis of fair value according to written risk management policies
Financial liabilities at fair value through profit or loss are measured at fair value upon initial recognition; related transaction costs, on the other hand, are recognized as part of profits and losses for the current term. They are measured subsequently at fair value, with the variation in fair value recognized as part of profits and losses for the current term. For derivative liabilities that are not linked to equity instruments without quotation that cannot be reliably measured at fair value and must be delivered through settlement with the said equity instruments, the Group will list them as financial liabilities carried at cost.

(XXVIII) Liability Reserve

The Group carries the current legal or constructive obligations for prior events and is

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very likely to require outflows of resources with economic benefits in order to pay off the said obligations and when the value of the said obligations can be reliably estimated, liability reserve is recognized. The measurement of liability reserve is based on the best estimated current value payable in order to pay off the obligations on the balance sheet date. The discount rate adopted is the pre-tax discount rate that reflects the time value of market to currency for the time being and evaluated specific liability risk. The discounted amortization is recognized under interest expenses. For operating losses in the future, liability reserve may not be recognized.

(XXIX)Employee Benefits

Short-term Employee Benefits

Short-term employee benefits are measured with the non-discounted value expected to be paid and will be recognized under expenses when related services are provided.

Post-retirement Benefits
(1) Defined Appropriation Plan

The pension fund with a defined appropriation plan is to be recognized as the pension fund cost for the current term according to the accrual basis. The pre-paid fund is recognized under assets within the scope of refundable cash or reduced payment in the future.

(2) Defined benefit plan
Net obligations under the defined benefit plan are calculated at discounted benefit value in the future earned by employees for the current term or from prior service and the current value of defined benefit obligations on the balance sheet date is adopted to subtract the fair value of planned assets. Defined net benefit obligations are calculated each year by the actuary adopting the expected unit welfare law. The discount rate, on the other hand, is determined by referring to the market dividend yield of high-quality corporate bonds with consistent currency and term with those of the defined benefit plan on the balance sheet date. In a country without an advanced market for such bonds, it is the market dividend yield of government bonds (on the balance sheet date) adopted.
Remeasurements generated from the defined benefit plan are recognized under other comprehensive income for the current term of occurrence and are expressed under retained earnings.
Related expenses of the service cost from the previous term are recognized

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immediately as part of profits and losses.

Separation Benefits
Separation benefits are the benefits provided as a result of termination of contract with an employment prior to the normal retirement date or termination when an employee decides to accept the invitation by the Company to accept the benefits in exchange for employment. The Group recognizes expenses when it is no longer possible to cancel the offer of separation benefits or recognize related recombination costs, whichever occurs first. Welfare that is not expected to be completely paid off within 12 months after the balance sheet date shall be cashed.
Remunerations for employees and directors/supervisors
Remunerations for employees and directors/supervisors are recognized under expenses and liabilities upon presence of legal or construction obligations and when the value can be reasonably estimated. Upon differences between the actual assigned value decided later and the estimated value, it will be handled as changes in accounting estimates.

(XXX ) Financial Liability and Equity Instruments

Categorization of Financial Liabilities or Equity Instruments
Liability and equity instruments issued by the Group are categorized as financial liabilities or equities according to the definitions of substantial and financial liability and equity instruments in contracts and agreements.
Equity Instrument
Equity instruments are any contract that signifies the remaining equities of an enterprise after all debts are subtracted from assets. Equity instruments issued by the Group are recognized with the result after the direct release cost is subtracted from the acquisition cost.
Financial Liability
Financial liabilities that are not available for transaction and are not designated to be measured at fair value through profit or loss are measured at post-amortized cost on the end date of the accounting period subsequently.
De-recognition of Financial Liabilities
Financial liabilities are only de-recognized upon dismissal, cancellation, or expiration of obligations by the Group. Upon de-recognition of financial liabilities, the difference between the book value and total value of paid considerations

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(including any non-cash assets transferred or liabilities undertaken) is to be recognized as part of profits and losses.

Offsetting of Financial Assets and Liabilities

Only when there are enforceable rights before the law to offset recognized financial assets and liabilities and delivery on the net worth basis or simultaneous realization of assets and payoff of liabilities are intended can financial assets and financial liabilities be offset and be expressed as net worth in the balance sheet.

(XXXI) Share Capital and Treasury Stock

1. Share Capital

Common stock is categorized as equity. The categorization of preferred stock is based on the substantial and financial liability and equity instrument definitions in contracts and agreements and is evaluated according to the special rights annexed to the preferred stock. It is categorized as liability when the basic properties of financial liabilities are demonstrated; otherwise, it is categorized as equity. For the incremental cost directly belonging to the newly released shares or stock options, the net worth after income tax is deducted is listed as value deduction under equities.

Treasury Stock

The Group recalls released shares and recognize them as “treasury stock” according to the considerations (including direct attributable cost) paid upon buyback to be the deductible under equities. When the disposal price of the treasury stock disposed of is above the book value, the difference is listed as part of capital reserve - transaction of treasury stock. When the disposal price is below the book value, the difference, on the other hand, writes off the capital surplus from gain on disposal of assets generated from transaction of treasury stocks of the same type and in case of shortage, it is debited from retained earnings. The book value of treasury stock is based on the weighted average and is calculated separately reflective of the cause of recall.

Upon write-off of treasury stock, capital reserve - share issuance premium and share capital is debited proportionally to the stock option. When the book value is above the total of the book value and the share issuance premium, the difference writes off the capital reserve generated from the transaction of treasury stocks of the same type. In case of shortage, it is debited from retained earnings. When the book value is below the total of the book value and the share issuance premium, on the other hand, the capital reserve generated from the transaction of treasury stocks of the same type is debited.

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Shares held in the Group by the subsidiaries shall be considered as and handled as treasury stock when the share of profits or losses is recognized adopting the equity method and upon compilation of the financial statement.

(XXXII) Share-based Payment

1.According to the share-based payment agreement with equity delivery, the obtained service from employees is measured at fair value of equity instruments given on the grant date and is recognized as compensation cost during the vesting period and equity is adjusted relatively. The fair value of equity instruments shall reflect impacts from vesting conditions and non-vesting conditions for the market price. Recognized compensation cost is adjusted as expected and will reflect the reward sizes according to the service conditions and non-market price vesting conditions until the final recognized value is recognized with the vested size on the vesting date.
2.The share-based payment agreement with cash delivery is recognized as compensation cost and liability during the vesting period at fair value of undertaken liabilities and is measured on respective balance sheet dates and settlement dates at fair value of the granted equity instrument. Any variation is recognized as part of profits and losses for the current term.

(XXXIII) Income Tax

Income tax expenses include income tax paid for the current term and deferred income tax. Except for income tax that is relevant to items recognized as other comprehensive income or directly recognized as equity is respectively recognized as other comprehensive income or directly recognized as equity, income tax is recognized as part of profits and losses.
The Group calculates the income tax for the current term according to the tax rate already established in legislation or with substantial legislation on the balance sheet date in the country of operation or where taxable income is generated. The management periodically evaluates how income tax is declared according to applicable income tax laws and regulations and estimates the income tax liability according to the taxes expected to be payable to the taxation agency under applicable circumstances. Undistributed earnings are levied for income tax according to the Income Tax Act. Once distribution of earnings is approved through the shareholders' meeting in the coming year after the year when the earnings are generated, the actual distribution of earnings is considered while the income tax for undistributed earnings is recognized.

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3.For the deferred income tax, the balance sheet method is adopted. The temporary difference from the book value shown in the balance sheet is recognized on the taxation basis for assets and liabilities. Deferred income tax liabilities deriving from the initially recognized good will, on the other hand, are not recognized. If the deferred income tax originates from the initial recognition of assets or liabilities in the transaction (excluding corporation consolidations) and accounting profits or taxation income (taxation loss) is not impacted at the time of transaction, on the other hand, it will not be recognized. The temporary difference associated with the invested subsidiary and affiliate, if the time point for reversal of the temporary difference can be controlled by the Group and the temporary difference is very unlikely to be reversed in a foreseeable future, will not be recognized. For the deferred income tax, legislation or substantial legislation on the balance sheet date is adopted and the tax rate (and taxation law) expected to be applicable upon realization of deferred income tax or upon pay-off of deferred income tax liabilities is to be followed.
The temporary difference of deferred income tax is very likely used to be written off within the scope of offsetting taxes in the future and the deferred income tax assets yet to be recognized or already recognized on each balance sheet date are re-evaluated.
Only when there are enforceable rights before the law to offset income tax assets against liabilities recognized for the current term and net worth-based payoff or simultaneous realization of assets and payoff of liabilities are intended can income tax assets and income tax liabilities for the current term be offset. Only when there are enforceable rights before the law to offset income tax assets and income tax liabilities for the current term and the deferred income tax assets and liabilities are generated by the same taxpaying entity or different tax-paying entities with taxes to be collected by the same agency yet only when the respective entities intend to pay off on the net worth basis or simultaneously realize assets and pay off liabilities can the deferred income tax assets be offset against liabilities.
For tax incentives as a result of expenditure by the Group for compliance with regulatory incentive items, income tax credit accounting is adopted. For the later period of carryover of unused income tax credit, deferred income tax assets are recognized when it is very likely that taxes collected in the future are within the scope of unused income tax credit.
The Group lists the estimated difference of income tax from the previous year and the adjusted difference approved by the tax collection agency as the adjustments of

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income tax for the current year.

(XXXIV)) Recognition of Income

2018

Having identified the fulfillment obligation in the contract with a customer, the Group amortizes the transaction price among respective obligations to be fulfilled under the contract and recognizes the income upon satisfaction of each fulfillment obligation.

Sales Income
(1) For the respective products manufactured by the Group and sold on the market, the income is recognized upon transfer of control over the product to the customer. In other words, as soon as the product is delivered to the customer, the customer has discretion over the distribution channels and pricing of the product and there are no implementation obligations yet to be fulfilled by the Group that are likely to affect the customer’s willingness to accept the product. As soon as the product is delivered to the designated location, the risk of being obsolete and lost is transferred to the customer. Only when the customer accepts the product according to the sales contract or there is objective evidence supporting that all acceptance criteria have been fulfilled does the delivery of the product occur.
(2) The Group provides standard warranty to sold products and is obligated to provide the refund upon discovery of product defects. The liability reserve is recognized upon sale.
(3) Accounts receivable are recognized upon delivery of the product to the customer and starting from the said time point, the Group owns unconditional rights over contract prices and can collect considerations from the customer upon time elapse. The advance payment collected prior to delivery of the product is recognized as contract liabilities.
(4) For processing of self-owned materials, the control over the ownership of processed products is not transferred. Therefore, the self-owned materials are not recognized as income.
Labor Income
(1) Advertising Income

When the Group signs a contract over advertising trailer with a customer, the income is recognized upon actual completion of broadcasting according to the extent of fulfillment of the implementation obligation. The extent of fulfillment of the implementation obligation is decided on the basis of the percentage of

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actual provided services in the overall labor to be provided.

(2) Video Income

The Groups signs the basic channel agency agreement with its customers so that cable TV service providers and other public broadcasters can transmit self-produced programs or agency channels through the satellite to be viewed by cable TV or network platform users. During the service contract period, the Group continues to provide users with the TV channel viewing right and the network bandwidth user right, among other obligations it has to fulfill. Therefore, it is recognized as income on the straight line basis during the service period.

(3) Licensing Income

The Group signs a contract with its customers and licensed the broadcasting right of films and the copyright of programs of the Group to the customers. Therefore, the licensing income is recognized during the authorized period reflective of the nature of licensing or recognized upon transfer of control over the rights to the customers. When the Group is to be engaged in activities with a major influence on the film broadcasting right and program copyright to directly impact the authorized customers yet such activities will not result in the nature of such authorization being the right strategy to provide access to intellectual properties upon transfer of service to the customers, related royalties are recognized as income on the straight line basis during the authorized period. If the authorization does not meet the above-mentioned criteria and is to provide customers with the right to use intellectual properties in nature, it is recognized as income upon transfer of authorization.

(4) Customers pay considerations according to the payment schedule as agreed upon in the contract. When the service already provided by the Group exceeds the amount payable by the customer, it is recognized as contract assets. If the amount payable by the customer exceeds the service already provided by the Group, it is recognized as contract liabilities.
Refund Liability

Income from sales and services are recognized at the net worth from the contract price with the estimated discount and other similar allowances deducted. The amount of income to be recognized is limited to the portion that is very unlikely to experience a reversal in the future and the estimates are updated on each balance sheet date. Related estimated payable discounts and other similar allowances for customers of sales and services as of the balance sheet date are recognized as

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refund liability.

4. Financial Components

The payment terms and conditions of the contract entered into by and between the Group and its customer are consistent to market practice. Therefore, it is determined that the contract does not contain significant financial components. In addition, for contracts with a time interval between transfer of the promised product or service and collection of considerations within a year, the transaction prices of significant financial components are not adjusted in order to reflect the time value of currency.

(5) Cost to secure contracts with customers
Although the incremental cost incurred from securing a contract with a customer for the Group is expected to be recoverable, related contract periods are shorter than a year; therefore, such cost is recognized as the operating cost or expense for the current term at the time of occurrence.

2017

The income is the fair value of collected or receivable considerations for the product sold to or service provided to the customer through normal business activities and is expressed with the net worth with estimated return, discount, and other similar allowances from the customer deducted.

1. Product Sales

(1) Product sales are recognized under income when all of the following criteria are fulfilled:
Major risks and rewards associated with the ownership of the product have
been transferred to the customer.
The Group does not continuously get involved in the management of sold
products and does not maintain effective control , either.
{1 } The value of income can be reliably measured.
{2 } Economic benefits associated with the transaction in the future are likely to flow into the Group.
Costs that have occurred or will occur and are associated with transaction can
be reliably measured.

In substantial terms, income from the product sales is recognized upon delivery of the product and transfer of legitimate ownership.

(2)For processing of self-owned materials, the ownership of the processed product and significant risks are not transferred. Therefore, the self-owned materials are not treated as sales.

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(3) The Group offers the quantity discount and defect return rights for sold products. The future discounts and value of returned goods are reasonably estimated according to historical experiences and other factors of concern. Liability reserve is set aside upon recognition of sales.
Labor Income, Service Income, Advertising and Licensing Income, Rent Income, Dividend Income, and Interest Income
(1) The income generated from labor provided according to the contract is recognized reflective of the extent of fulfillment of the contract. Among the labor to be provided, if a certain action item is far more important than other action items, the income shall be recognized upon completion of the said specific action item.
(2) Service income is to be recognized according to the contents of related agreements on the condition, however, that the economic benefits of the transaction are very likely to flow into the Group and the value of income can be reliably measured.
(3) Advertising income is to be recognized upon completion of broadcasting or upon general completion of the production cost. Licensing income for cable TV channels is to be recognized on the monthly basis according to the contract period. Copyright licensing income is to be recognized upon delivery of the product proportionally to the number of episodes delivered as compared to the number episodes agreed upon in the contract.
(4) Rent income is to be recognized during the lease period on the straight-line basis.
(5) Income from the dividends generated by investments is to be recognized when shareholders’ entitlement to collection is defined on the condition, however, that economic benefits related to the transaction are very likely to flow in the Group and the value of income can be reliably measured.
(6) Interest income is to be recognized according to the outstanding principal and the applicable effective interest rate on the accrual basis with the elapsed time.

(XXXV) Government Subsidies

Government subsidies are recognized at fair value when it can be reasonably confirmed that the enterprise will follow the additional conditions for the government subsidies and that such subsidies will be received. If the nature of government subsidies is to compensate for expenses incurred within the Group, such government subsidies are recognized as part of profits and losses for the current term on a systematic basis during the period when related expenses are incurred. Government

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subsidies related to real estate, plants and equipment are recognized as non-current liabilities and are recognized as part of the profits and losses for the current term with the straight line method according to the estimated durability of related assets.

V. Major Sources of Major Accounting Judgments, Estimates, and Assumed Uncertainty Results of the Group’s consolidated financial statement is affected by the accounting policy adopted, the accounting estimates and assumptions. Therefore, when the Group adopts the major accounting policy in Note 4, for information that is uneasy to be obtained from other sources and is likely to result in major adjustment risk of the book values of assets and liabilities in the next consolidated financial statement, the management must apply suitable professional judgments, estimates, and assumptions. All the estimates and related assumptions made by the Group are optimum estimates made according to the requirements of IFRSs approved and released by the FSC. The estimates and assumptions are based on historical experiences and other factors considered to be relevant. The actual results and estimates, however, may differ somehow. The Group continues to review estimates and assumptions. If modifications made to estimates only affect the current term, modifications to accounting estimates are recognized for the current term. If the estimates affect the current term and future periods at the same time, they are recognized for the current term and future periods with modifications to the estimates.
(I) Major judgments adopted in accounting policy
Except for judgments involving estimates (Refer to (II) mentioned below), the management recognizes judgments regarding amounts with significant impacts in the financial statement while adopting the accounting policy:
1. Judgment over the operational model in the classification of financial assets (applicable to 2018)
  - The Group evaluates the operational model that financial assets belong to according to the level of joint management reflected in the group of financial assets in order to accomplish specific operating purposes. Such assessment needs to take into consideration all relevant evidence, including how asset performance is measured, the risk of affecting performance, and how the compensation for related managers is decided and requires utilization of judgment. The Group constantly evaluates the operational model to determine if it is appropriate and monitors financial assets measured at post-amortized cost and investments in debt instruments measured at fair value through other comprehensive income that are de-recognized before the expiration date in order to understand the cause of disposal and to evaluate if such disposal falls in line with the goal of the operational model. If it is found that the operational model has changed, the Group postpones the adjustment of

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categorization of financial assets obtained subsequently.

Financial assets - Impairment of investments in equities (applicable to 2017) The Group decides if impairment has occurred to respective financial assets - equity investments according to IAS 39; such decision relies on major judgment. The Group evaluates the time and amount of the fair value of respective equity investments below the cost and the financial soundness and short-term business prospects of the invested, including industrial and departmental performance, technical transformation, and operating and financing cash flows, among other factors.

When the lower-than-cost fair value of respective equity investments are significant or long-lasting, the Group recognizes impairment loss under profits and losses for the current term for “financial assets carried at cost.”

Investment Real Estate
Some of the investment real estate held by the Group is meant for earning the rent or capital appreciation and also includes real estate held for the time being with the future purpose yet to be determined while the remainder is meant for self-use. When respective components can be sold separately, only when the portion held for self-use is insignificant in the respective real estate can such real estate be categorized under investment real estate.
Business Lease Commitment - The Group as the Leaser
The Group has already signed the business real estate lease for certain real estate combinations. For the sake of evaluating its terms and conditions, the Group retains major risks and rewards over the ownership of the real estate and such lease is treated as business lease.

(II) Important accounting estimates and assumptions

The accounting estimates made by the Group are based on the reasonable expectations of future events according to the circumstances on a specific day. The actual results, however, might vary from the estimates. There might be estimates and assumptions over the risk of major adjustments in the book values of assets and liabilities for the coming fiscal year. Please refer to the descriptions below:

Estimated impairment of financial assets (applicable to 2018)
The estimated impairment of accounts receivable and contract assets is based on the default rate and expected loss rate assumed by the Group. The Group takes into consideration historical experiences, current market condition, and prospective information while rendering assumptions and selecting the estimated input value of impairment. For all important assumptions and input values adopted, refer to the

172

descriptions in Note 6 (4). If the actual cash flows in the future are below expectations, significant impairment loss may result. As of December 31, 2018, the book value of accounts receivable and contract assets of the Group totaled $3,143,302 thousand (with the allowance loss of $12,619 thousand deducted).

Estimated Impairment of Accounts Receivable (applicable to 2017)

When there is objective evidence showing signs of impairment, the Group takes into consideration estimated cash flows in the future. The value of impairment loss is measured by the difference between the book value of the assets and the current value discounted at the original effective interest rate of the specific financial asset of estimated cash flows in the future (excluding the future credit loss yet to occur). If the actual cash flows in the future are below expectations, significant impairment loss may result. As of December 31, 2017, the book value of accounts receivable of the Group totaled $3,305,332 thousand (with the allowance loss of $17,781 thousand deducted).

Valuation of Inventory

Due to the fact that the inventory is valued at cost or net realizable value, whichever is lower, the Group must apply judgment and estimates to determine the new realizable value of the inventory on the balance sheet date. Due to the rapid changes in the industrial environment, the Group evaluates the value of the inventory on the balance sheet date due to normal damage and consumption, obsolescence or absence of market sale value and writes off the inventory cost to net realizable value. Such inventory valuation is mainly based on the product demand during a specific period in the future for estimation so major changes are likely. {1 > As of December 31, 2018 and 2017, The book value of the inventory was $1,980,783 thousand and $ 2,023,166 thousand, respectively. (With the allowance for inventory obsolescence and valuation losses being $59,566 thousand and $46,691 thousand, respectively, deducted)

Fair value measurement and valuation procedure (applicable to 2018) When no quotations are available on the active market for assets and liabilities measured at fair value, the Group determines whether valuation is to be outsourced or not and decides an adequate fair value evaluation technique according to applicable laws and regulations or by judgment. When it is impossible to obtain first-rate input values while the fair value is being estimated, the Group refers to the analysis of the financial standing and operational outcome of the invested, the latest transaction price, the quotation of the same equity instrument on a non-active market, the quotation of a similar instrument on an active market, and comparable

173

company evaluation multiplier while deciding the input value. If the actual variation in the input value in the future differs from expectations, it might result in variation of the fair value. The Group periodically updates respective input values reflective of the market status in order to monitor if the fair value is measured adequately. For information on the fair value evaluation technique and input value, please refer to the descriptions in Note 12 (4) for details. As of December 31, 2018, the book value of corporate shares yet to be listed or traded publicly and limited partnership investments held by the Group totaled NT$726,191 thousand.

Fair value of financial instruments (applicable to 2017)
The fair value of financial instruments with no active market or without quotations is decided with the evaluation method. Under the said circumstances, fair value is evaluated form observable data or model of similar financial instruments. If there are no observable parameters on the market, the fair value of financial instruments is evaluated through adequate assumptions. When an evaluation model is adopted to decide the fair value, all such models have to be calibrated in order to ensure that the output reflects the actual data and market price. Only observable data may be adopted for the model whenever possible. Please refer to the descriptions in Note 12 (4) for details. As of December 31, 2017, the book value of corporate shares with no active market yet to be listed or traded publicly and limited partnership investments held by the Group totaled $459,269 thousand. (with the accumulated impairment value of $47,739 thousand deducted).
6.Impairment Assessment of Investments Adopting the Equity Method
When there are impairment signs showing that a certain investment adopting the equity method might have been impaired so that the book value cannot be recovered, the Group evaluates the impairment of the said investment. The Group evaluates the recoverable amount according to the discounted value of expected cash flows in the future of the invested that the Group is entitled to or the expected cash dividends to be received, and cash flows in the future generated from disposal of investments and analyzes the legitimacy of related assumptions. As of December 31, 2018 and 2017, according to the careful assessments made by the Group, there had not been major impairment loss.
Impairment Evaluation of Tangible Assets, Intangible Assets (Excluding Good Will), and Other Non-current Assets
While impairment of assets is being evaluated, the Group needs to rely on subjective judgment, the asset use model, and industrial characteristics and decides the independent cash flows of a specific asset group, the durable years of assets, and

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possible income and expenses to occur in the future. Any estimation change as a result of changing economic conditions or strategies can result in major impairment in the future. As of December 31, 2018 and 2017, the accumulated impairment value of tangible assets, intangible assets (excluding good will) and other non-current assets was NT$85,510 thousand and NT$79,844 thousand, respectively.

Impairment Evaluation of Good Will

When deciding whether or not goodwill has experienced impairment, it is required to estimate the usable value amortized to the cash generating unit of goodwill. In order to calculate the usable value, the management shall estimate the cash flows in the future expected from the cash generating unit and decides the suitable discount rate to be adopted when calculating the current value. If the actual cash flows are below expectations, significant impairment loss may result. As of December 31, 2018 and 2017, the good will value recognized by the Group after impairment loss totaled NT$674,070 thousand.

Reliability of Deferred Income Tax Assets

Deferred income tax assets are only recognized when there is likely sufficient tax income in the future for writing off the temporary difference. In the evaluation of the realizability of deferred income tax assets, major accounting judgments and estimates by the management is involved, including the expected growths and profitability rates in the future sales income, the usable income tax credit,and taxation planning, among other assumptions. Any change in the global economic environment, industrial environment, and laws and regulations can result in major adjustments of deferred income tax assets. As of December 31, 2018 and 2017, the deferred income tax assets recognized by the Group totaled $49,358 thousand and $44,905 thousand, respectively. Deferred income tax assets that are not very likely to have tax income and hence are not recognized by the Group were worth $14,223 thousand and $11,764 thousand, respectively.

Calculation of Long-term Employee Benefit Liabilities

When calculating the current value of defined benefit obligations, the Group must apply judgment and estimates in order to decide related actuary assumptions on the balance sheet date, including the discount rate and the growth rate of compensation in the future. Any variations in the actuary assumptions can significantly affect the value of defined benefit obligations of the Group. As of December 31, 2018 and 2017, the book value of the Group’s long-term employee benefit liabilities (including net defined benefit liability and liability reserve - non-current) was $82,643 thousand and $94,747 thousand, respectively.

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VI. Descriptions of Important Accounting Items

(I) Cash and cash equivalents

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Item December 31, 2018 December 31, 2017
Cash and petty cash $ 1,580 $ 1,903
Checking deposit 25,637 23,835
Demand deposit 462,637 419,382
Time deposit on the original due date
1,308,800 785,026
within three months
Bills sold under re-purchase agreements
930,800 892,607
and debts
Total $ 2,729,454 $ 2,122,753
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None of the Group’s cash and cash equivalents are provided as collateral or pledged.
The market interest rate range of time deposits of the Group within three months of their original expiration date as of December 31, 2018 and 2017 was, respectively, 0.60%～0.65% and 0.65%～1.73%, with the interest to be applied at a fixed annual interest rate or dynamically.
The market interest rate range of bills sold under re-purchase agreements and debts of the Group within three months of the undertaking period as of December 31, 2018 and 2017 was, respectively, 0.51%～3.10% and 0.38%～1.67%.
－
(II) Financial assets measured at fair value through other comprehensive income current

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Item December 31, 2018 December 31, 2017
Measured Compulsorily at Fair
Value through Income
Mutual fund beneficiary
$ 39,000 $ -
certificates
Increase: Adjustment in －
20
valuation
Total $ 39,020 $ -
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－
1. For the statement of financial assets at fair value through profit or loss current, refer to Note 13 (1) (2)-3 for details.
2.The net profits recognized by the Group under profits and losses for the current term between January 1 and December 31, 2018 and 2017, totaled $114 thousand and $33 thousand, respectively.
The Group has no financial assets at fair value through other comprehensive income
－ current in its possession provided as collateral or pledged.

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(III) Notes receivable

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

Item December 31, 2018 December 31, 2017
Total notes receivable $ 394,217 $ 392,248
Decrease: Allowance loss/ bad －－
debt (2017)
Net amount $ 394,217 $ 392,248
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None of the Group’s notes receivable has expired; the credit loss rate is expected to be 0%.
None of the Group’s notes receivable are provided as collateral or pledged.

(IV) Accounts receivable (including related parties)

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Item December 31, 2018 December 31, 2017
Accounts receivable total $ 2,618,964 $ 2,877,440
Decrease: Allowance loss/ bad
( 12,619) ( 17,781)
debt (2017)
Subtotal 2,606,345 2,859,659
Total in Accounts Receivable - －
735
Related Party
Decrease: Allowance loss/ bad －－
debt (2017)
－
Subtotal 735
Net amount $ 2,607,080 $ 2,859,659
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2018

The aging analysis and allowance loss measured according to the provision matrix

for accounts receivable (including related parties) are as follows:

December 31, 2018

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

Aging periods Total Allowance loss Net amount
Not overdue $ 2,524,724 $ - $ 2,524,724
－
Overdue 1 to 30 77,182 77,182
days
Overdue 31 to 90 9,783 5,001 4,782
days
－
Overdue 91 to 591 591
180 days
Overdue 181 to 811 419 392
365 days
－
Overdue for more 6,608 6,608
than 365 days
Total $ 2,619,699 $ 12,619 $ 2,607,080
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The above are analyzed on the basis of the number of days delinquent.

For the expected credit loss rate (with abnormal items excluded, it shall be 100% recognized) within the respective aging ranges mentioned above of the Group , it is 0% ~ 50% when not past due or upon delinquency within 90 days, 30% ~ 100% upon delinquency between 90 ~365 days, and 100% upon delinquency over 365 days.

For the accounts receivable yet to be past due of the Group, the expected credit loss risk is extremely low. For some of the accounts receivable already past due on the balance sheet date, on the other hand, the Group takes into consideration all reasonable supporting information such as other credit reinforcement protection and subsequent payment collection and write-off and the credit quality is evaluated to be without major changes. Meanwhile, the credit risk is not significantly increased after initial recognition. Therefore, the Group's management expects that the accounts receivable will not suffer major credit loss as a result of non-fulfillment of the contract by the counterparty.

The Group adopts the simplified approach of IFRS 9 by recognizing the allowance loss for accounts receivable according to the expected credit loss for the duration. The expected credit loss for the duration is calculated with the provision matrix, taking into consideration breach-of-contract records and historical experiences in payment collection, the increase in delayed payments exceeding the average load period, and also the current financial standing of the customer as well as observable national or regional industrial and economic situation changes and prospects relevant to arrears of receivables prospectively for the future. As is shown by the historical experience in credit loss of the Group, there is no significant difference in the loss patterns among different customer populations. Therefore, the provision matrix does not distinguish further the customer populations; instead, the expected credit loss rate is established only by the number of delinquent days for accounts receivable and according to the actual circumstances. The Group does not hold any collateral for the said accounts receivable.

If there is any evidence showing that the counterparty is faced with serious financial difficulties and the Group cannot reasonably expect the recoverable amount, the Group will recognize 100% allowance loss or write off related accounts receivable directly; nevertheless, claims will continue and the recovered amounts are recognized under profits or losses.

178

Information is analyzed for the variation in allowance loss recognized for accounts
receivable (including related parties).

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Item January 1 to December
31, 2018
Balance at beginning of term $ 17,781
(IAS 39)
－
Effect of IFRS 9
Retrospective Application
Balance at beginning of term 17,781
(IFRS 9)
－
Increase: Appropriation of
Impairment Loss
Decrease: Reserved of ( 5,101)
Impairment Loss
Decrease: The current ( 61)
write-off does not be
recovered.
Balance at end of term $ 12,619
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None of the Group’s accounts receivable are provided as collateral or pledged.

2017

The aging analysis of accounts receivable (including related parties) is as follows: December 31, 2017

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Aging periods Total Impairment Unimpaired
－
Not overdue $ 2,787,753 $ $ 2,787,753
－
Overdue 1 to 30 days 62,770 62,770
Overdue 31 to 90 13,497 8,610 4,887
days
Overdue 91 to 180 4,432 183 4,249
days
－
Overdue 181 to 365 2,100 2,100
days
－
Overdue for more 6,888 6,888
than 365 days
Total $ 2,877,440 $ 17,781 $ 2,859,659
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The above are analyzed on the basis of the number of days delinquent.

The accounts receivable that are yet to be past due and impaired of the Group all meet the loan criteria established according to the industrial characteristics, business

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scale, and profitability of the counterparty. While determining the recoverability of accounts receivable, the Group takes into consideration any change in the quality of credit from the original credit date to the balance sheet date. The allowance for bad debts takes reference of the aging analysis, historical experiences, and prior records of arrears and current financial standing analyzed of the counterparty in order to estimate the amount that cannot be recovered. In addition, for accounts receivable for which the allowance for bad debts is yet to be recognized by the Group on the balance sheet date, due to the quality of credit has not experienced major changes, the Group’s management believes that the amount is still recoverable and the Group does not hold any collateral for the said accounts receivable.

Information is analyzed for the variation in allowance loss recognized for accounts receivable (including related parties).

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

Item January 1 to December
31, 2017
Balance at beginning of term $ 14,965
Increase: Appropriation of 2,816
Impairment Loss (Bad Debts)
－
Decrease: Reserved of
Impairment Loss (Bad Debts)
－
Decrease: The current
write-off does not be
recovered.
Balance at end of term $ 17,781
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As of December 31, 2017, all the amounts of the allowance for bad debts were impairment losses evaluated for the group and there were no impairment losses of accounts receivable individually evaluated.

None of {1 > the Group’s accounts receivable (including related parties) are provided as collateral or pledged.

(V) Other receivables

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Item December 31, 2018 December 31, 2017
Interest receivable $ 30,239 $ 15,470
Duty drawback receivable 50,633 35,160
－
Royalty Refundable 268
Withholding Tax
Others 769 2,527
Total $ 81,641 $ 53,425
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180

(VI) Inventory

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Item December 31, 2018 December 31, 2017
Raw material $ 503,927 $ 500,237
Material 179,646 178,427
In-process inventory 180,486 207,565
Semi-finished product 565,418 606,879
Finished good 350,778 383,435
By-product 3,475 5,442
Raw materials in transit 256,619 187,872
Subtotal 2,040,349 2,069,857
Decrease: The allowance for ( 59,566) ( 46,691)
inventory obsolescence and
valuation losses
Net amount $ 1,980,783 $ 2,023,166
1. The value of sales costs related to the inventory is as follows:
January 1 to January 1 to December
Item
December 31, 2018 31, 2017
The value of sales costs related to $ 19,217,243 $ 17,808,666
the inventory
Increase: Other operating cost 1,356,840 1,657,434
Increase: Unshared manpower and 106,878 95,093
manufacturing expenses
－
Increase: Inventory short (net 95
amount)
Increase: Inventory net realizable 12,875 4,157
value loss
－
Decrease: Inventory over (net ( 121)
amount)
Decrease: Revenue from sale of ( 7,925) ( 8,465)
scraps
Book operating cost $ 20,685,790 $ 19,556,980
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The operating costs between January 1 and December 31, 2018 and 2017 included the loss in the net realizable value of the inventory, which was $12,875 thousand and $4,157 thousand, respectively, mainly because of the falling prices of raw materials and product quotations.
None of the Group’s inventory is provided as collateral or pledged.

181

(VII) Advance payment

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

Item December 31, 2018 December 31, 2017
Advance collection of payments $ 28,161 $ 12,593
Pre-paid rent 1,003 407
Advance insurance premiums 18,503 18,534
Advance manufacturing expenses 132 244
Inventory of supply 2,519 2,441
Advertising exchange goods and 2,014 1,352
gifts
Purchase taxes 31,268 44,123
Allowance tax 922 1,088
Others 9,019 6,916
Total $ 93,541 $ 87,698
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－ (VIII) Other financial assets current

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

Item December 31, 2018 December 31, 2017
Bank deposits with restricted
$ 11,371 $ 12,563
purposes
Time deposit on the original due
2,348,514 1,663,457
date over three months
Callable bonds with an undertaking －
339,060
period more than three months
Total $ 2,698,945 $ 1,676,020
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Bank deposits with restricted purposes refer to restricted reserve account with a designated purpose. Please refer to the descriptions in Note 8 (2) for details.
The time deposits with the original expiration date more than three months away and callable bonds more than three months away held by the Group do not meet the definition for cash equivalents and hence are categorized under other financial assets - current. Due to the fact that impacts from discounting are insignificant for the short duration involved, they are measured at investment value.
The market interest rate range of time deposits of the Group within an original expiration date more than three months away as of December 31, 2018 and 2017 was, respectively, 0.90%～3.32% and 1.015%～2.23%.
The market interest rate range of callable bonds with an undertaking period more than three months as of December 31, 2018 was 2.97%～3.50% and it has been agreed that they would be redeemed before August 22, 2019.

182

It is evaluated by the Group that the expected credit risk of the above-mentioned financial assets is not high and the credit risk did not increase after initial recognition.

－ (IX) Other current assets Others

ther current assets`－`Others
Item Program Broadcasting Cost－Current (note) Others Total	December 31, 2018 $ 166,660 － $ 166,660	December 31, 2017
		$ 259,228 66 $ 259,294

Note: Cost of broadcasting programs - current; refers to the descriptions in Note 6 (19) for details.

Financial assets at fair value through other comprehensive income`－`Non-current	Financial assets at fair value through other comprehensive income`－`Non-current	Financial assets at fair value through other comprehensive income`－`Non-current
Item	December 31,	December 31,
	2018	2017
Domestic public corporate shares
China Life Insurance Company Limited
China Development Financial Holding Corporation	$ 788,348	(Note 1 )
Domestic or foreign corporate shares yet to be listed	1,123,868
Coos Venture Capital Corp.	18,412
TECO Nanotech Co., Ltd.	219
Guozong Development Company Limited	5,000
Guozong Construction Development Enterprise	5,000
YODN Lighting Corp.	9,754
Bridgestone Taiwan Co., LTD.	77,104
Jeou Tai Technology Group	26,604
Global Mobile Corp.	14,400
Great Dream Pictures, Inc.	10,000
Com2B Corp.	8,961
Domestic or foreign limited partnership’s
equities
CDIB Capital Asia Partners L.P.	350,044
CDIB Capital Global Opportunities	139,248
Fund L.P.
China Development Advantageous Venture Investment Limited Partnership	74,490
Subtotal	2,651,452
Increase: Adjustment in valuation	1,568,774
Total	$ 4,220,226

183

The Group started to adopt IFRS 9 on January 1, 2018 and chooses not to rearrange the comparison period according to the transitional requirements in IFRS 9.
The above-mentioned investments held by the Group are not the operational model for short-term profits. The management believes that if variation in the short-term fair value of such investments is included as part of profits or losses, it is against the above-mentioned investment plan. Therefore, such investments are chosen and designated to be measured at fair value through other comprehensive income. Such investments were originally categorized as financial assets available for sale according to IAS 39 (including booked financial assets carried at cost). For the re-categorization and 2017 information, please refer to the descriptions in Notes 3(1)-1 and Note 6(11) and (12) for details.
The invested limited partnership equity in CDIB Capital Asia Partners L.P. newly added by the Group between January 1 and December 31, 2018 totaled USD 738 thousand (NTD 22,499 thousand). In addition, capital distribution of the limited partnership equity between January 1 and December 31, 2018 totaled USD 313 thousand (NTD 9,585 thousand). As of December 31, 2018, the Group had accumulatively invested in the limited partnership equity in CDIB Capital Asia Partners L.P. totaling USD 11,270 thousand. The expected total investment value of the Group is USD 13,000 thousand.
Between January 1 and December 31, 2018, the Group had additionally invested in the limited partnership equity in CDIB Capital Global Opportunities Fund L.P. totaling USD 4,534 thousand (NTD 139,248 thousand). The expected total investment value of the Group is USD 30,000 thousand.
The Group increased its investment in the limited partnership equity of China Development Industrial Bank (Venture Capital Investment) between January 1 and December 31, 2018. The expected total investment value of the Group is 200,000 thousand.
The investment in structural entity’s equity held by the Group is limited partnership equity in nature and hence no transaction quantity and unit transaction price are available and rights and obligations are undertaken only within the scope of the investment contract without a significant influence on the investment. In other words, the maximum exposure amount on the balance sheet date is the book value of the said financial asset.

184

Net losses recognized under other comprehensive income as a result of variation in fair value between January 1 and December 31, 2018 of the Group totaled $280,712 thousand and are accumulated as part of other equities. The amount of accumulated profits or losses directly transferred to be under retained earnings as a result of disposal of investments is 0.
The Group has no financial assets at fair value through other comprehensive income － non-current in its possession provided as collateral or pledged.
－
(XI) Financial assets available for sale Non-current

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December 31, December 31,
Item
2018 2017
Domestic public corporate shares
China Life Insurance Company
(Note 1) $ 788,348
Limited
China Development Financial
1,123,868
Holding Corporation
Subtotal 1,912,216
Increase: Adjustment in valuation 1,658,267
Total $ 3,570,483
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The Group started to adopt IFRS 9 on January 1, 2018 and chooses not to rearrange the comparison period according to the transitional requirements in IFRS 9.
The value recognized by the Group under profits and losses for the current term between January 1 and December 31, 2017 totaled $0 and the net profits recognized under other comprehensive income totaled $234,492 thousand.
None of the financial assets available for sale - non-current held by the Group is provided as collateral or pledged.
For the shares of listed companies originally categorized to be measured at fair value through profit or loss, due to fluctuating international economic situation in the third quarter of 2008 and the confidence crisis on the global financial market results in collapsing values of financial commodities. The Group does not intend to sell the financial assets in the table below to be traded within a short period of time. Therefore, according to the requirements in Section 50 (C) of IAS 39, such financial assets on July 1, 2008 are suitably re-categorized as part of financial assets available for sale, totaling $375,468 thousand. Related information is provided below:
(1) Information about the balance of the position is yet to be de-recognized for the above-mentioned recategorized assets:

185

December 31, 2017

Item Public corporate shares	Book value $ 339,085	Fair value $ 339,085

(2) Variation in fair value of re-categorized financial assets and fictional information that assumes that financial assets are not recategorized:

January 1 to December 31, 2017

Item Public corporate shares	Book value Other Comprehensive Income Recognition of Losses $ 69,821	Fictional information of measured by original category
		Current Recognition of Losses $ 69,821

(XII) Financial assets carried at cost - Non-current

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

December 31,
Item December 31, 2017
2018
Domestic or foreign corporate shares
yet to be listed
Coos Venture Capital Corp. (Note 1) $ 18,412
TECO Nanotech Co., Ltd. 219
Guozong Development Company
5,000
Limited
Guozong Construction
5,000
Development Enterprise
YODN Lighting Corp. 9,754
Bridgestone Taiwan Co., LTD. 77,104
Jeou Tai Technology Group 26,604
Global Mobile Corp. 14,400
Great Dream Pictures, Inc. 10,000
Com2B Corp. 8,961
Subtotal $ 175,454
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186

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December 31,
Item December 31, 2017
2018
(Continued from Previous Page) (Note 1) $ 175,454
Foreign limited partnership’s
equities
CDIB Capital Asia Partners 331,554
L.P.
Subtotal 507,008
Decrease: Accumulated impairment
( 47,739)
value
Net amount $ 459,269
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The Group started to adopt IFRS 9 on January 1, 2018 and chooses not to rearrange the comparison period according to the transitional requirements in IFRS 9.
The above-mentioned shares of listed (traded-over-the-counter) companies and limited partnership equity investments held by the Group are measured by the cost less impairment loss on the balance sheet date. Due to the fact that the object is not traded publicly on an active market, it is impossible to obtain sufficient industrial information of similar companies and related financial information of invested companies, the range of reasonable estimates of the fair value is significant and it is impossible to reasonably evaluate chances of various estimates, the Group’s management believes that the fair value cannot be reliably measured. This is why they are categorized as financial assets carried at cost.
The invested limited partnership equity in CDIB Capital Asia Partners L.P. newly added by the Group between January 1 and December 31, 2017 totaled USD 2,423 thousand (NTD 73,122 thousand). In addition, capital distribution of the limited partnership equity between January 1 and December 30, 2017 totaled USD 295 thousand (NTD 8,833 thousand). As of December 31, 2017, the Group had accumulatively invested in the limited partnership equity in CDIB Capital Asia Partners L.P. totaling USD 10,845 thousand. The expected total investment value of the Group is USD 13,000 thousand.
The investment in the structural entity’s equity held by the Group is limited partnership equity in nature and hence no transaction quantity and unit transaction price are available and rights and obligations are undertaken only within the scope of the investment contract without a significant influence on the investment. In other words, the maximum exposure amount on the balance sheet date is the book value of the financial assets carried at cost.

187

Due to the fact that some of the financial assets carried at cost continue to suffer from deficits, which is determined to be sure of impairment signs, the Group calculates the difference between related recoverable amounts with the cash generating unit and the book value of the stock option investment. The amount of impairment loss recognized between January 1 and December 31, 2017 totaled 540 thousand. Such impairment loss was already listed under other profits and losses in the consolidated income statement. The accumulated impairment value of financial assets carried at cost recognized by the Group as of December 31, 2017 totaled 47,739 thousand.
None of the financial assets carried at cost held by the Group is provided as collateral or pledged.

(XIII)Investments Adopting the Equity Method

Investment in Affiliates

Affiliate name Zhenjiang Chimei Chemical Company Limited Zhangzhou Chimei Chemical Company Limited Total	December 31, 2018 Book value Holding % $ 5,509,893 30.40% 717,809 30.40% $ 6,227,702	December 31, 2017	December 31, 2017
	Book value $ 5,509,893 717,809 $ 6,227,702	Book value $ 5,500,309 － $ 5,500,309	Holding %
			30.40% －

The portions of profits and losses and other comprehensive income of affiliates recognized using the equity method between January and December 31, 2018 and 2017 are recognized according to the financial statements audited by CPAs during the same period of respective affiliates.
Portions of profits and losses and other comprehensive income of affiliates recognized adopting the equity method are as follows: January 1 to December 31, 2018 January 1 to December 31, 2017

Affiliate name Zhenjiang Chimei Chemical Company Limited Zhangzhou Chimei Chemical Company Limited Total	Current Recognition of Losses $ 988,415 － $ 988,415	Other Comprehensiv e Income Recognition of Losses ($ 349,901) 908 ($ 348,993)	Current Recognition of Losses $ 1,547,677 － $ 1,547,677	Other Comprehensiv e Income Recognition of Losses
				$ 369,753 － $ 369,753

188

The Group remitted CNY160,512 thousand (USD23,340 thousand/ NT$716,901 thousand ) in August 2018 to invest in Changzhou Chimei Chemical Company Limited. The said investment has been submitted to and approved by the Investment Commission of MOEA through MOEA Review (II) No. 10700087220 dated 04 June 2018.
None of the Group’s Investments using the equity method is provided as collateral or pledged.
For the information of the nature of operation, the main operation site, and the country where each of the above-mentioned affiliates is registered, please refer to the disclosure of information on investments in Mainland in Note 13 (3) for details.
The overview of financial information of main affiliates of the Group is as follows: (The following overview of financial information is prepared on the basis of the financial statements of respective affiliates according to the IFRSs and reflects the adjustments made upon adoption of the equity method.)
(1) Zhenjiang Chimei Chemical Company Limited
Balance Sheet

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

Item December 31, 2018 December 31, 2017
Current Assets $ 27,101,894 $ 25,175,406
Non-current Assets 9,028,267 9,215,641
Current Liabilities ( 15,344,042) ( 13,719,206)
－－
Non-current Liabilities
Equities 20,786,119 20,671,841
Company Holding ratio 30.40% 30.40%
The company's equities 6,318,980 6,284,240
Unrealized Income ( 809,087) ( 783,931)
Affiliate investment book value $ 5,509,893 $ 5,500,309
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Comprehensive Income Statement

Comprehensive Income S	tatement
Item Operating revenue Net Profits of Current Term Other Comprehensive Income Total of Comprehensive Income Affiliate Collected Dividends	January 1 to December 31, 2018 $ 72,921,032 3,251,366 － $ 3,251,366 $ 808,265	January 1 to December 31, 2017
		$ 73,402,472
		5,089,436 －
		$ 5,089,436 $ 341,857

189

(2) Zhangzhou Chimei Chemical Company Limited
Balance Sheet

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

Item December 31, 2018 December 31, 2017
Current Assets $ 2,279,983 $ -
－
Non-current Assets 84,477
－
Current Liabilities ( 3,247)
－－
Non-current Liabilities
－
Equities 2,361,213
－
Company Holding ratio 30.40%
－
The company's equities 717,809
－－
Unrealized Income
Affiliate investment book
$ 717,809 $ -
value
 Comprehensive Income Statement
January 1 to December January 1 to December
Item
31, 2018 31, 2017
Operating revenue $ - $ -
－－
Net Profits of Current Term
Other Comprehensive －－
Income
Total of Comprehensive
$ - $ -
Income
Affiliate Collected Dividends $ - $ -
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Comprehensive Income Statement

Note: Zhangzhou Chimei Chemical Company Limited was established in August 2018 and is still during its founding stage; no major profits or losses occurred in 2018.

190

(XIV) Real estate, plants and equipment

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

Item December 31, 2018 December 31, 2017
Land $ 3,410,682 $ 3,410,682
House and Building 1,599,726 1,587,140
Machinery and Equipment 13,468,888 13,392,891
Transport Equipment 103,537 101,235
Other Equipment 1,393,925 1,277,374
Unfinished engineering and equipment 51,489 102,532
to be inspected
Cost total 20,028,247 19,871,854
Decrease: Accumulated depreciation ( 12,545,939) ( 12,036,143)
value
Decrease: Accumulated impairment ( 54,835) ( 57,478)
value
Net amount $ 7,427,473 $ 7,778,233
----- End of picture text -----

Land $3,410,682 －－－ $3,410,682 $ - －－－－ $ - Land $3,410,682 －	Machinery and Equipment	Total $19,871,854 553,717 ( 345,551) ( 46,031) ( 5,742) $20,028,247 $12,093,621 855,538 ( 344,367) － ( 4,018) $12,600,774 Total
	$13,392,891 165,108 ( 161,687) 76,043 ( 3,467)
	$13,468,888
$ －－－－ $ Land $3,410,682 －
		$19,822,011 414,829

191

Disposition Re-categorized (note) Impact on the exchange rate December 31, 2017 Balance Item		－－－ $3,410,682 Land		( 20,142) 13,194 ( 552) $1,587,140 House and Building $ 859,130 47,616 ( 15,964) － ( 352) $ 890,430	( 245,671) 131,655 ( 1,143) $13,392,891 Machinery and Equipment $ 9,836,593 660,716 ( 244,464) － ( 2,837) $10,250,008	( 4,049) 1,529 ( 209) $ 101,235 Transport Equipment $ 78,938 7,211 ( 3,863) － ( 40) $ 82,246	( 79,686) ( 32,539) ( 233) $1,277,374 Other Equipment $ 787,389 162,913 ( 79,296) － ( 69 ) $ 870,937		－ ( 127,140) － $ 102,532 Unfinished engineering and equipment to be inspected $ - －－－－ $ -	( 349,548) ( 13,301) ( 2,137) $19,871,854 Total $11,562,050 878,456 ( 343,587) － ( 3,298) $12,093,621
Accumulated depreciation and impairment value: January 1, 2017 Balance Depreciation Cost Disposition Impairment Loss (Reserved) Impact on the exchange rate December 31, 2017 Balance		$ - －－－－ $ -

Note: The net variation in re-categorization between January 1 and December 31, 2018 and 2017 is the transfer of fees of real estate, plants and equipment, that is $46,031 thousand and $21,726 thousand, respectively, and inbound remittance from advance equipment payment of $0 and $8,425 thousand, respectively.
The adjustment in the real estate, plants and equipment obtained from the statement of cash flows is as follows:

Item Increase in real estate, plants and equipment Increase: Decrease in Equipment Accounts Receivable Decrease: Rented assets Paid Cash	January 1 to December 31, 2018 $ 553,717 ( 14,036) ( 3,298) $ 535,792	January 1 to December 31, 2017
		$ 414,829 27,373 － $ 442,202

Capitalized amount and interest rate range of the cost of loans for real estate, plants and equipment: None.
Major components of the Group’s real estate, plants and equipment have depreciation calculated by the following durability on the straight line basis:

192

(1) House and Building ～ Main part of house and premise 26 56 years ～ Auxiliary equipment of house 11 21 years ～ Air-conditioning equipment 5 8 years ～ Fire prevention equipment 4 6 years ～ Greening of roads 4 11 years (2) Machinery and Equipment ～ Chemical equipment 8 25 years Cogeneration equipment 16 years Gas supply equipment 10 years ～ Broadcasting equipment 5 6 years Others 7 years (3) Transport Equipment SNG vehicle 5～ 7 years ～ OB broadcasting vehicle 6 7 years Others 2 ～ 6 years (4) Other Equipment ～ Furniture and office equipment 4 7 years Lease improvement 10 years Others 3 ～ 8 years

Due to the fact that the actual wear and tear of some equipment is greater than the expected depreciation, the Group expects that cash in-flows in the future of such equipment will be reduced to result in the recoverable amount less than the book value. As of December 31, 2018 and 2017, the accumulated impairment value of real estate, plants and equipment recognized, after careful evaluation by the Group, was $54,835 thousand and $54,478 thousand, respectively.
For information on real estate, plants and equipment provided as collateral, please refer to the descriptions in Note 8 (1) for details.

193

(XV) Investment Real Estate

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

Item December 31, 2018 December 31, 2017
Land $ 60,363 $ 60,363
House and Building 71,208 71,208
Subtotal 131,571 131,571
Decrease: Accumulated
( 51,728) ( 50,705)
depreciation value
Decrease: Accumulated －－
impairment value
Net amount $ 79,843 $ 80,866
House and
Item Land Total
Building
Cost:
January 1, 2018
$ 60,363 $ 71,208 $ 131,571
Balance
－－－
Addition
－－－
Disposition
Impact on the exchange －－－
rate
December 31, 2018
$ 60,363 $ 71,208 $ 131,571
Balance
Accumulated depreciation
and impairment value:
January 1, 2018
$ - $ 50,705 $ 50,705
Balance
－
Depreciation Cost 1,023 1,023
－－－
Disposition
Impact on the exchange －－－
rate
December 31, 2018
$ - $ 51,728 $ 51,728
Balance
House and
Item Land Total
Building
Cost:
January 1, 2017
$ 60,363 $ 71,208 $ 131,571
Balance
－－－
Addition
－－－
Disposition
Impact on the exchange －－－
rate
December 31, 2017
$ 60,363 $ 71,208 $ 131,571
Balance
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194

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

House and
Item Land Total
Building
Accumulated depreciation
and impairment value:
January 1, 2017
$ - $ 49,570 $ 49,570
Balance
－
Depreciation Cost 1,135 1,135
－－－
Disposition
Impact on the exchange －－－
rate
December 31, 2017
$ - $ 50,705 $ 50,705
Balance
----- End of picture text -----

Capitalized amount and interest rate range of the cost of loans for investment real estate: None.
Rent income and direct operation cost of investment real estate:

Item	January 1 to December 31, 2018	January 1 to December 31, 2017
Rent income of investment real estate Current emerge of rent income and direct operation cost of investment real estate Current not generation of rent income and direct operation cost of investment real estate	$ 5,400 $ 1,023 $ -	$ 5,040
		$ 1,135 $ -

The investment real estate of the Group is located in Dali, Taichung City. The said lot is meant for software industry in nature and hence transactions on a comparable market are not frequent and it is impossible to obtain reliable alternative fair value estimates. As a result, it is impossible to reliably decide the fair value.
There has not been any impairment of investment real estate after careful evaluations by the Group.
All the investment real estate of the Group is self-owned equity and is not provided as collateral or pledged.

195

(XVI)Intangible Assets

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

Item December 31, 2018 December 31, 2017
Good Will $ 674,070 $ 674,070
Decrease: Accumulated －－
impairment value
Net amount $ 674,070 $ 674,070
----- End of picture text -----

There has not been any impairment of intangible assets after careful evaluations by the Group.
2.Good will is amortized to the Group’s cash generating units identified by the operating department:

==> picture [414 x 107] intentionally omitted <==

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

Item December 31, 2018 December 31, 2017
Good Will
Business Division of TV
$ 658,915 $ 658,915
Media
Other Division 15,155 15,155
Total $ 674,070 $ 674,070
----- End of picture text -----

3.Good will is amortized to the cash generating units identified by the Group. The recoverable amount is evaluated by the use value and the use value is forecasted and calculated with the pre-tax cash flows in accordance with the management’s financial budget. The recoverable value calculated by the Group according to the use value is greater than the book value; therefore, good will has not experienced major impairment and when used to calculate the use value, the gross profit margin, growth rate, and discount rate are primarily considered. The management decides the budget gross profit margin according to prior performance and its expectations of developments on the market. The adopted weighted mean growth rate and the forecast in the industrial report are identical. The adopted discount rate is the pre-tax rate and reflects the specific risks of related operating departments.

(XVII) Refundable deposits

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

Item December 31, 2018 December 31, 2017
Contract bond $ 805 $ 1,491
Premium For Lease - Lessee 12,345 11,914
EcoGarantie(R) 2,000 2,000
Others 1,514 1,684
Total $ 16,664 $ 17,089
----- End of picture text -----

196

(XVIII) Long-term pre-paid rent

Item Land access	December 31, 2018 $ 9,130	December 31, 2017 $ 9,602

The land user right is obtained from the Land Administration Bureau of the People's Republic of China to facilitate the use of production premises and office buildings. The user right is good for 50 years. The Group is entitled to the land user right, income right, and disposition rights for assignment and subletting, etc. within the duration of land use and is responsible for paying respective taxes for using the land.
The amortized value of the land user right between January 1 and December 31, 2018 and 2017 is consistently $279 thousand . By the single entry functionality type, it is listed under operating cost.
There has not been any impairment of land user right according to the Group’s careful evaluations.
None of the Group’s land user right is provided as collateral or pledged.

－ (XIX) Other non-current assets Others

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

Item December 31, 2018 December 31, 2017
Program Broadcasting Cost
－ $ 298,492 $ 382,854
Non-current
Long-term prepaid expense 4,741 7,638
Others 187 279
Total $ 303,420 $ 390,771
----- End of picture text -----

1 The program broadcasting cost includes the cost of purchasing externally the broadcasting right of films, outsourcing of film-making, or self-production of programs. Related details are given below:

==> picture [416 x 198] intentionally omitted <==

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

Item December 31, 2018 December 31, 2017
Movie library $ 285,926 $ 259,228
Advance purchase 174,139 358,952
Prepayment-preserving 35,762 46,268
Subtotal 495,827 664,448
Decrease: Accumulated
impairment value - Program ( 30,675) ( 22,366)
Broadcasting Cost
Decrease: Amortization
( 166,660) ( 259,228)
portion within a year
Program Broadcasting Cost
－ $ 298,492 $ 382,854
Non-current
----- End of picture text -----

197

It is expected to amortize part of it within a year under other current assets - others. Please refer to Note 6 (9) for details.

2.Due to the fact that some programs were not broadcast due to the lack of popularity on the market or extended storage between January 1 and December 31, 2018 and 2017, the Group expects that cash flows of such programs in the future will be reduced. Therefore, the estimated recoverable amount is $38,252 thousand and $0, less than the book value. Therefore, the Group recognized the impairment loss of such programs between January 1 and December 31, 2018 and 2017 to be $10,007 thousand and $22,366 thousand, respectively. The Group adopts the use value while deciding the recoverable value of such programs. The discount rate adopted for January 1 through December 31, 2018 and 2017, was 9.20% and 7.51%, respectively. The impairment loss has been included in the extra incomes and expenses - other profits and losses in the consolidated income statement. As of December 31, 2018 and 2017, the accumulated impairment value of the programs recognized by the Group was $ 30,675 thousand and $ 22,366 thousand, respectively.
None of the programs held by the Group is provided as collateral or pledged.
All the amortized entries for the program broadcasting cost and long-term pre-paid fees are as follows:

fees are as follows:
Item Operating cost Operating expenses Total	January 1 to December 31, 2018 $ 737,594 3,362 $ 740,956	January 1 to December 31, 2017
		$ 917,491 4,256 $ 921,747

(XX) Short-term Borrowings

Property Credit loan Import financing Total	December	31, 2018 Interest rate range 0.90%～ 4.01% 1.32%	December 31, 2017	December 31, 2017
	Amount $ 2,240 593 $ 2,833		Amount $ 33,057 4,524 $ 37,581	Interest rate range
				0.90%～4.31% 1.32%

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The Group signs short-term comprehensive loan contracts with respective banks and provides the promissory note showing the specific amount to show its commitment to pay off the loan. For information on the provision of collateral and pledge for short-term borrowings, please refer to Note 8 (1) and Note 9-2 for details.

(XXI) Other Payables

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

Item December 31, 2018 December 31, 2017
Salary payable and award $ 388,766 $ 360,490
Remunerations for employees
52,043 49,216
payable
Remunerations for
77,145 79,639
directors/supervisors payable
Freight payable 19,680 15,140
Accrued taxes payable 20,704 21,567
Insurance premiums payable 8,827 10,501
Utilities expense payable 8,324 7,685
Cost of renovation payable 22,227 14,839
Service charge payable 18,433 16,188
Labor cost payable 4,823 2,806
Equipment payable 20,471 6,435
Uncontrolled Equity (Capital －
17,626
Decrease of Subsidiary) payable
Others 27,817 34,091
Total $ 669,260 $ 636,223
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－ (XXII) Liability Reserve Current

Item Employee Benefits - Vacation payment	December 31, 2018 $ 17,015	December 31, 2017 $ 17,072

－
1. Employee benefits liability reserve current is estimated and recognized for the vested rights of employees to service and leave. Under most circumstances, sick leave and maternity or paternity leave is contingent in nature and is dependent on events to occur in the future instead of accumulating. Therefore, such cost is recognized upon occurrence of leave.

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`－` 2. Variable information of employee benefits liability reserve current is as follows:

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January 1 to December January 1 to December
Item
31, 2018 31, 2017
Balance at beginning of term $ 17,072 $ 17,233
Addition amount of the current
24,308 23,224
term
Access amount of the current
( 20,532) ( 20,723)
term
Reserve amount of the current
( 3,833) ( 2,662)
term
Balance at end of term $ 17,015 $ 17,072
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(XXIII) Pre-collected Payments

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Item December 31, 2018 December 31, 2017
Advance collection of pre-collected $ - $ 43,930
Pre-collected rent 71 71
Others 81 53
Total $ 152 $ 44,054
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Note: The Group started to apply applicable requirements of IFRS 15 on January 1, 2018. Obligations that require transfer of products or services to the customer upon collection of or permission to collect considerations as agreed upon in the contract are recognized as contract liabilities. Please refer to Note 6 (36) for details.

－ (XXIV) Other Current Liabilities Others

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Item December 31, 2018 December 31, 2017
All Collections $ 6,502 $ 47,811
－
Others 172
Total $ 6,674 $ 47,811
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－ (XXV) Liability Reserve Non-current

Item Plans of Other Long-term Employee Benefit Liabilities	December 31, 2018 $ 8,486	December 31, 2017 $ 6,944

Other long-term employee benefit plans of the Group refer to the long-term service award and consolation money for employees. Payment criteria for the long-term service award and the consolation money are based on the base points obtained according to the number of years in service.

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Components of other long-term employee benefits obligations and liabilities already recognized by the Group are as follows:

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Item December 31, 2018 December 31, 2017
Current Value of Defined Benefit
Obligations of Other Long-term $ 8,486 $ 6,944
Employee Benefit Liabilities
－－
Fair value of planned assets
Net variation in other long-term
employee benefits obligations and $ 8,486 $ 6,944
liabilities
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Net variation in other long-term employee benefits obligations and liabilities is as

follows:

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January 1 to January 1 to
Item
December 31, 2018 December 31, 2017
Balance at beginning of term $ 6,944 $ 3,550
Cost of Other Long-term Employee
Benefit Liabilities:
Current service cost 752 381
－
Prior period service cost 2,316
Interest Expense 78 38
Subtotal $ 830 $ 2,735
January 1 to January 1 to
Item
December 31, 2018 December 31, 2017
(Continued from Previous Page) $ 830 $ 2,735
Re-measured:
－
Actuarial gains and losses - 147
population statistics assumption
change
－
Actuarial gains and losses - 7
financial assumption change
Actuarial gains and losses - 901 994
experience adjustments
Recognized as part of profits and 1,885 3,729
losses
Paid benefits ( 343) ( 335)
Balance at end of term $ 8,486 $ 6,944
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The amount of benefit costs recognized under profits and losses of other long-term employee benefits plans mentioned above is consistently listed under management

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cost as a single entry by the type of function.

Composition of Planned Assets:

The Group is not configured with related assets and payment only occurs when it actually happens.

The current value of other long-term employee benefits obligations of the Group is precisely calculated by a qualified actuary. Primary assumptions on the date of measure for the actuary valuation are as follows:

Item Discount rate Future salary increase rate	2018 0.875%～1.125% 1.75%～2.00%	2017
		0.875%～1.375% 1.75%～2.00%

The assumptions of the death rate in the future are estimated according to the Fifth Experience Mortality Table of the Insurance Industry in the region of Taiwan.

The analysis of the current value of other long-term employee benefits obligations affected as a result of the variation in the primary actuary assumptions adopted is as follows:
(1)Interest Rate Risk
A reduced interest rate of government bonds will result in increased current values of other long-term employee benefits obligations; the return on liability investment in planned assets, however, increases, too. Both exercise partial write-off effects on other long-term employee benefits liabilities.
(2) Salary Risk
Calculations of the current values of other long-term employee benefits obligations refer to the compensation in the future for members enrolled in the plan. Therefore, the increase in the compensation of members enrolled in the plan will result in the increase in the current value of other long-term employee benefits obligations.
If major reasonable possible changes occur, respectively, to actuary assumptions, with other assumptions remaining unchanged, the amount increased (decreased) in the current value of other long-term employee benefits obligations is as follows:

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Item December 31, 2018: Impact on Current Value of Defined Benefit Obligations of Other Long-term Employee Benefit Liabilities	Discount rate Increase by 0.25% Decrease by 0.25% ($ 147) $ 151	Future salary	increase rate
	Increase by 0.25% ($ 147)	Increase by 0.25% $ 70	Decrease by 0.25% ($ 69)

Item December 31, 2017: Impact on Current Value of Defined Benefit Obligations of Other Long-term Employee Benefit Liabilities	Discount rate Increase by 0.25% Decrease by 0.25% ($ 113) $ 117	Future salary	increase rate
	Increase by 0.25% ($ 113)	Increase by 0.25% $ 39	Decrease by 0.25%
			($ 38)

In practice, due to the fact that actuary assumptions might be pegged to one another, the possibility of variation in a single assumption is minimal. In other words, the above-mentioned sensitivity analysis might not be able to reflect the actual variation in the current value of other long-term employee benefits obligations. In addition, in the above-mentioned sensitivity analysis, the current value of other long-term employees benefits obligations on the end date of the reporting period is precisely calculated adopting the projected unit credit method; it is measured on the same basis as that for the defined benefit liability on the balance sheet. The method adopted for the sensitivity analysis of the current term is the same as the assumption and that adopted in the previous term.

The expected appropriation and payment for the above-mentioned other long-term employee benefits plan in 2019 of the Group are NT$0 and NT$608 thousand, respectively.

(XXVI) Payable Rent

The Group rents transport equipment through financial leasing. The lease period is 3 years. Upon expiration of the lease period, there are no terms in the said lease about an renewals or acquisition right and an extension. The Group uses the ownership over leased assets to be the collateral for the payable rent. Interest rates of all financing lease obligations are already fixed at the start date of the contract. As of December 31, 2018 and 2017, the annual interest rate range is 2.616% and 1.50%, respectively. The minimum payable total amount of rent in the future as of December 31, 2018 and 2017 and its current value are as follows:

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December 31, 2018

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Financial lease of Future financial Financial lease
Item
total liabilities costs of total liabilities
Current
Less than 1 year $ 1,998 $ 54 $ 1,944
Non-current
1 to 5 years 999 8 991
－－－
Over 5 years
Subtotal 999 8 991
Total $ 2,997 $ 62 $ 2,935
December 31, 2017
Financial lease Future financial Financial lease of
Item
of total liabilities costs total liabilities
Current
Less than 1 year $ 1,830 $ 8 $ 1,822
Non-current
－－－
1 to 5 years
－－－
Over 5 years
－－－
Subtotal
Total $ 1,830 $ 8 $ 1,822
Item December 31, 2018 December 31, 2017
Defined Benefit Plan $ 69,702 $ 83,329
Defined Appropriation Plan 4,455 4,474
Total $ 74,157 $ 87,803
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(XXVII) Post-retirement Benefit Plan

1. Defined Benefit Plan

(1) The Company and the domestic subsidiaries of the Group have defined benefits for retirement in place as required by the Labor Standards Act which are applicable to the duration of service of all official employees under the Labor Pension Statutes enforced on July 1, 2005 and subsequent duration of service of employees that chose to continue to apply the Labor Standards Act following the enforcement of the Labor Pension Statutes. For employees who meet the retirement criteria, payment of the pension fund is calculated by the duration of service and the mean salary for the 6 months prior to retirement. If the duration of service is within 15 years, inclusive, the employee is entitled two base points per

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year. If the duration of service exceeds 15 years, the employee is entitled to a base point upon each anniversary. The maximum number of base points, however, is limited at 45. The Company and its domestic subsidiaries set aside the pension fund at a certain ratio to the total monthly salary and save it in the Retirement Reserve account with the Bank of Taiwan under the name of Employee Retirement Reserve Supervisory Committee. In addition, to meet the needs of high-ranking managers, the Company set up the Manager Retirement Fund Management Committee in September 2004 and sets aside the pension fund for managers at a certain ratio to the total salary paid to managers each month and saves it in the exclusive account with a financial institution under the name of Managerial Retirement Reserve of the Company. The Company and its domestic subsidiaries calculate the balance in the above-mentioned Retirement Reserve account for the employees before the end of each year. If the balance is insufficient to pay the amount of pension fund calculated as mentioned above for employees expected to meet the retirement criteria within the coming year, the Company will set aside the difference in a lump sum by the end of March in the coming year.

(2) The amount recognized on the Balance Sheet of the defined benefit plan is as follows:

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

Item December 31, 2018 December 31, 2017
Current value of defined benefit
$ 924,215 $ 922,805
obligations
Fair value of planned assets ( 854,513) ( 839,476)
Net Defined Benefit Liability $ 69,702 $ 83,329
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(3) The variation in the current value of defined benefit obligations is as follows:

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

January 1 to January 1 to
Item
December 31, 2018 December 31, 2017
Value of defined benefit obligations at the
$ 922,805 $ 950,480
beginning of term
Current service cost 12,936 14,328
Interest Expense 10,584 10,823
Re-measured:
Actuarial gains and losses - population
233 2,827
statistics assumption change
Actuarial gains and losses - financial
13,586 ( 4)
assumption change
Actuarial gains and losses - experience
7,713 ( 2,823)
adjustments
Paid benefits (Note) ( 43,642) ( 52,826)
Value of defined benefit obligations at the
$ 924,215 $ 922,805
end of term
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Note: The benefits payments between January 1 and December 31, 2018 and 2017 include benefits payments out of planned assets, which were $42,942 thousand and $50,038 thousand, respectively, and those booked were $700 and $2,788 thousand, respectively.

(4) Variation in the fair value of planned assets is as follows:

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

January 1 to January 1 to
Item
December 31, 2018 December 31, 2017
Fair value of planned assets at the
$ 839,476 $ 820,797
beginning of term
Interest income 9,857 9,587
Re-measured:
Net Interest rewards of planned
23,354 ( 1,765)
assets
Employer appropriation 24,768 60,895
Paid benefits of planned assets ( 42,942) ( 50,038)
Fair value of planned assets at the
$ 854,513 $ 839,476
end term
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(5) The amount of the defined benefit costs in the defined benefit plan recognized on the comprehensive income statement is as follows:

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

January 1 to January 1 to
Item
December 31, 2018 December 31, 2017
Current service cost $ 12,936 $ 14,328
Interest expense of defined benefit
10,584 10,823
obligations
Interest income of planned assets ( 9,857) ( 9,587)
Recognized as part of profits and
$ 13,663 $ 15,564
losses
Re-measured:
Actuarial gains and losses - $ 233 $ 2,827
population statistics assumption
change
Actuarial gains and losses - 13,586 ( 4)
financial assumption change
Actuarial gains and losses - 7,713 ( 2,823)
experience adjustments
Net Interest rewards of planned ( 23,354) 1,765
assets
Other Comprehensive Income ($ 1,822) $ 1,765
Recognition of Losses
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The amount of net defined benefit costs recognized under profits and losses of the above-mentioned benefit plan is as follows as a single entry by the type of function:

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January 1 to January 1 to
Item
December 31, 2018 December 31, 2017
Operating cost $ 7,437 $ 9,387
Operating expenses
Selling Expense 522 709
Management Expense 5,366 5,052
Research and Development
338 416
Expense
Subtotal 6,226 6,177
Total $ 13,663 $ 15,564
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(7) For the fund assets for the defined benefit retirement plan of the Company and its subsidiaries, operation is outsourced to the Bank of Taiwan according to the items in Article 6 of the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund ( that is, to be saved in domestic and international financial institutions, to be invested in domestic and international listed, traded-over-the-counter, or private placement equity securities, and to be invested in domestic and international real estate security-based instruments) within the ratio and scope of amount for outsourced operation defined in the investment utilization plan for the year of the specific fund. For related operations, they are supervised by the Supervisory Committee of the Labor Retirement Fund. The minimum income decided to be distributed each year from the fund may not be below the income calculated with a two-year time deposit interest rate of a local bank. In case of shortage, the treasury will supplement it upon approval by the competent authority. Due to the fact that the Company is not entitled to take part in the operation and management of the said fund, it is impossible to disclose the categorization of the fair values of planned assets as required in Section 142 of IAS 19. For the fair values of all assets consisting the fund as of December 31, 2018 and 2017, please refer to the annual pension fund utilization report announced by the government.

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(8) The current value of defined benefit obligations of the Company and its domestic subsidiaries is precisely calculated by a qualified actuary. Primary assumptions

on the date of measure for the actuary valuation are as follows:

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Item 2018 2017
----- End of picture text -----

Item	2018	2017
Discount rate	0.875%～1.250%	0.875%～1.375%
Future salary increase rate	1.75%～2.00%	1.75%～2.00%
Average duration of defined benefit obligations	5.7～13.1 years	4.4～13 years

The assumptions of the death rate in the future are estimated according to the Fifth Experience Mortality Table of the Insurance Industry in the region of Taiwan.

(9) The Company and its domestic subsidiaries are exposed to the risks below due to the pension fund system of the Labor Standards Act:
①Interest Rate Risk
A reduced interest rate of government bonds will result in increased current values of defined benefit obligations; the return on liability investment in planned assets, however, increases, too. Both exercise partial write-off effects on net defined benefit liabilities.
Salary Risk
Calculations of the current values of defined benefits obligations refer to the compensation in the future for members enrolled in the plan. Therefore, the increase in the compensation of members enrolled in the plan will result in the increase in the current value of defined benefits obligations.
(10) If major reasonable possible changes occur, respectively, to actuary assumptions, with other assumptions remaining unchanged, the amount increased (decreased) in the current value of defined benefits obligations is as follows:

Discount rate Increase by 0.25% Decrease by 0.25% ($ 21,216) $ 21,969 ($ 22,192) $ 23,011	Future salary increase rate	Future salary increase rate
Increase by 0.25% ($ 21,216) ($ 22,192)	Increase by 0.25% $ 21,377 $ 22,428	Decrease by 0.25%
		($ 20,752)
		($ 21,744)

208

In practice, due to the fact that actuary assumptions might be pegged to one another, the possibility of variation in a single assumption is minimal. In other words, the above-mentioned sensitivity analysis might not be able to reflect the actual variation in the current value of defined benefits obligations. In addition, in the above-mentioned sensitivity analysis, the current value of defined benefits obligations on the end date of the reporting period is precisely calculated adopting the projected unit credit method; it is measured on the same basis as that for the defined benefit liability on the balance sheet. The method adopted for the sensitivity analysis of the current term is the same as the assumption and that adopted in the previous term.

(11) The expected appropriation and payment for the above-mentioned defined benefits plan in 2019 of the Company and the domestic subsidiaries are NT$23,949 thousand and NT$20,883 thousand, respectively.

2. Defined Appropriation Plan

(1) The Company and the domestic subsidiaries of the Group have defined appropriation guidelines in place for retirement that are applicable to national employees as required by the Labor Pension Statutes. The Company sets aside 6% of the monthly salary to be the labor pension for the personal accounts of employees with the
Labor Insurance Bureau in accordance with the labor pension system defined in the Labor Pension Statutes that employees choose to apply. The payment of the pension fund can be done on a monthly basis or in a lump sum according to the amount in the personal retirement account of each employee and the accumulated income. After the Company and the domestic subsidiaries appropriate a fixed amount to the Labor Insurance Bureau under this plan, they are relieved of the legal or constructive duty to pay additional values.
(2) Overseas subsidiaries of the Group follow the retirement guidelines specified by the local government. The pension fund or retirement fund reserve is set aside from the salary paid to each local employee. The funds of each employee are to be centrally managed by the government. Such companies, except for the appropriations on a monthly basis or on a yearly basis as required by the local government, do not have further obligations.

209

(3) The pension fund cost recognized by the Group from January 1 through December 31, 2018 and 2017 was $26,514 thousand and $27,048 thousand, respectively. The amount of net defined benefit liability according to the above-mentioned defined appropriation plan by the Company as of December 31, 2018 and 2017 was $4,455 thousand and $4,474 thousand, respectively.
The amount of the pension fund cost from the above-mentioned defined appropriation plan recognized under profits and losses is as follows as a single entry by the type of function:

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

January 1 to January 1 to
Item
December 31, 2018 December 31, 2017
Operating cost $ 10,032 $ 9,789
Operating expenses
Selling Expense 1,306 1,485
Management Expense 14,626 15,210
Research and Development
550 564
Expense
Subtotal 16,482 17,259
Total $ 26,514 $ 27,048
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(XXVIII) Guarantee deposits

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

Item December 31, 2018 December 31, 2017
Premium For Lease -
$ 900 $ 900
Lessor
－
Pick-up deposit 3,582
Others 480 520
Total $ 4,962 $ 1,420
----- End of picture text -----

－ (XXIX) Other Non-current Liabilities Others

Item Disposal of investment unrealized deferred income	December 31, 2018 $ 23,993	December 31, 2017 $ 24,343

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(XXX) Share Capital

1. Common Stock and Preferred Stock

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

Item December 31, 2018 December 31, 2017
Rated shares (Thousand shares) 1,000,000 1,000,000
Rated Share Capital $ 10,000,000 $ 10,000,000
Shares of issued and fully paid
(Thousand shares)
- Common Shares 906,620 906,620
- Preferred Shares 20,000 20,000
- Issued Shares Total (Thousand 926,620 926,620
shares)
Issued Share Capital - Common $ 9,066,203 $ 9,066,203
Shares
Issued Share Capital - Preferred 200,000 200,000
Shares
Issued Share Capital Total $ 9,266,203 $ 9,266,203
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The common stock and preferred stock is worth NT$10 per issued share. Each share is entitled to one voting right and the right to collect dividends.

2.preferred stock, 20,000 thousand shares in total, was issued upon capital increase in cash in August 1984 of the Company, with the rights and obligations as follows:
(1) In case of any earnings in the final accounting books, 6% for the preferred stock dividend shall first be assigned. For the remainder of earnings that may be distributed, the distribution may be decided by the Board of Directors according to the holding ratio of common stock and preferred stock and distribution may begin upon approval through the shareholders’ meeting.
(2) Remaining properties of the Company, if any, are prioritized for the distribution.
(3) For the remainder, the rights available are identical to those of the common stock.

(XXXI) Capital Reserve

apital Reserve
Item Treasury Stock Transaction Premium Gifted assets Recognition of Changes in Ownership Equity in Subsidiaries Total	December 31, 2018 $ 177,734 2,786 13 $ 180,533	December 31, 2017
		$ 146,379 1,061 6 $ 147,446

As is required by the Company Act, the premium from releasing shares in excess of their denomination and the capital reserve as a gift and obtained, besides the option to

211

be used for making up deficits, when the Company does not have accumulated deficits, new shares or cash may be issued proportionally to the existing shares among the shareholders. In addition, according to applicable requirements of the Securities Exchange Act, when the above-mentioned capital reserve is set aside to be the capital, the sum of such appropriations a year may not exceed 10% of the paid-in capital size. In the event that such shortage is not the result of earnings reserve already appropriated to make up capital deficits, the Company may not appropriate the capital reserve. In addition, the variation in the ownership equity in the subsidiaries and dividends yet to be claimed by shareholders past the deadline that are recognized may be used to make up the deficits.

(XXXII) Retained Earnings

As is required by the Articles of Incorporation, in cases of earnings in the final accounting book, after taxes are paid, deficits are made up, 10% as the legal reserve is set aside, and the special reserve is set aside or reversed according to the deductibles for shareholders’ equity that occurs for the year, they are the earnings that may be distributed for the year. Together with the accumulated earnings yet to be distributed from the previous year, they are the accumulated earnings available for distribution and from which 6% as the preferred stock dividends shall be distributed first. If the dividends of preferred stock for each year are not fully assigned, the shortage is entitled to prioritized distribution and be made up for the year in the next year where earnings are available for distribution. The remaining earnings yet to be distributed are to be distributed after the Board of Directors has stipulated the distribution proposal according to regulatory requirements, the dividend policy, and funding status, among others, and submitted it to and have it approved through the shareholders’ meeting. In addition, for information on the distribution policy, estimation and recognition basis, and actual assignment of remunerations for employees and directors and supervisors, refer to Note 6(40) for details.
The Company’s dividend policy is as follows:
The industrial environment that the Company is in is changeable and the corporate life cycle is at the steady growth phase, the economic settings will be kept track of in order to realize sustainable management. In light of the Company’s long-term financial planning, future funding demand, and protection over shareholders’ rights, the cash dividend released each year by the Company is not below 10% of the sum of cash and share dividends combined that are released for the year (excluding the 6% dividend for preferred stock).
The legal reserve, besides being used to make up for the Company’s deficits and be 212

issued to shareholders in the form of new share or cash according to their original holding ratio, may not be used. For new shares or cash released, the limit is 25% of the paid-in capital size.

For the distribution of earnings, the Company appropriates and reverses the special reserve according to FSC Issuance No. 1010012865 letter dated April 6, 2012 and FSC Issuance No. 1010047490 letter dated November 21, 2012, and the requirements indicated in the “Applicability Questions and Answers of Appropriating Special Reserve after the International Financial Reporting Standards (IFRSs) are adopted” shall be followed. Later, in case of any reversal of the net worth of other equity deductibles, earnings may be distributed with regard to the reversal.
The Company held the general shareholders’ meetings on June 15, 2018 and June 16, 2017, respectively, where the earnings distribution proposals for 2017 and 2016 were approved as follows:

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

Distributed Earnings Per Dividend (NT$)
Items 2017 2016 2017 2016
－
Appropriation of Legal $ 328,864 $ 240,069
----- End of picture text -----

Appropriation of Legal		$ 328,864		$ 240,069		－
Reserve								－
Appropriation of Special	(	17,380)	(	42,114)		－
Reserve (Reserved)								－
Preferred Stock Dividend -		12,000		12,000	$	0.60	$	0.60
Cash
Preferred Stock Shareholder		20,000		20,000		1.00		1.00
Bonus - Cash
Common Stock Shareholder		906,620		906,620		1.00		1.00
Bonus - Cash
Common Stock Shareholder		－		－		－
Bonus - Stock								－

With regard to the distribution of earnings as stipulated by the Board of Directors and decided through the shareholders’ meeting, you may search the Market Observation Post System.

The 2018 earnings distribution proposal of the Company is still pending stipulation by the Board of Directors and decision through the shareholders' meeting. For related information, you may search the Market Observation Post System after related meetings are called for.

213

(XXX III) Other Equity Items

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Unrealized
Exchange Income from Unrealized
Differences on Financial Income from
Translation of Assets at Fair Financial
Item Total
Foreign Value through Assets
Financial Other Available for
Statements Comprehensive Sale
Income
January 1, 2018 Balance ($ 119,538) $ - $ 1,007,410 $ 887,872
Effect of Retrospective
－
Application and Retrospective 1,191,225 ( 1,007,410) 183,815
Restatement
Other equity adjusted items is －
223,298 ( 280,712) ( 57,414)
recognized directly
－
Belong to Uncontrolled Equity 4,163 35,206 39,369
－－－－
Rendering Profit and Loss Items
－－－－
Rendering Retained Earnings
Portions of adopting the equity －－
( 348,993) ( 348,993)
method
Income tax recognized as related －－
34,990 34,990
to other equities items
December 31, 2018 Balance ($ 206,080) $ 945,719 $ - $ 739,639
Unrealized
Exchange Income from Unrealized
Differences on Financial Income from
Translation of Assets at Fair Financial
Item Total
Foreign Value through Assets
Financial Other Available for
Statements Comprehensive Sale
Income
January 1, 2017 Balance $ 27,250 (Note 1) $ 835,015 $ 862,265
Other equity adjusted items is ( 481,153) 234,492 ( 246,661)
recognized directly
Belong to Uncontrolled Equity 1,587 ( 62,097) ( 60,510)
－－－
Rendering Profit and Loss Items
－
Portions of adopting the equity 369,753 369,753
method
－
Income tax recognized as related ( 36,975) ( 36,975)
to other equities items
December 31, 2017 Balance ($ 119,538) $ 1,007,410 $ 887,872
----- End of picture text -----

The Group started to adopt IFRS 9 on January 1, 2018 and chooses not to rearrange the comparison period according to the transitional requirements in IFRS 9.
The related exchange difference generated from the conversion from the functional

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currency to the presentation currency of the Group (that is, New Taiwan Dollar) of the net assets of overseas operating institutions is directly recognized as the exchange currency converted from the financial statement of an overseas operating institution under other comprehensive income.

(XXXIV) Treasury Stock

As of December 31, 2018 and 2017, the value of treasury stock bought back by the Group was consistently $0.
The current-term variation in the investments in the Company's stock held by subsidiaries that is considered to be treasury stock is summarized as follows:

January 1 to December 31, 2018

Name of subsidiary GPPC Chemical Corporation Total	Type Common Shares Preferred Shares	Balance at beginning of term Shares value 3,128 $ 72,312 1,776 49,858 4,904 $ 122,170	Addition of Current Term Shares value － $ - －－－ $ -	Decrease of	Current Term	End at beginning of term	End at beginning of term
		Shares 3,128 1,776 4,904	Shares	Shares 2,881 － 2,881	value $ 66,593 － $ 66,593	Shares	value $ 5,719 49,858 $ 55,577
			－－－			247 1,776 2,023

January 1 to December 31, 2017

Name of subsidiary	Type	Balance at beginning of term	Balance at beginning of term	Addition of Current Term	Addition of Current Term	Decrease of Current Term	Decrease of Current Term	End at beginning of term	End at beginning of term
		Shares	value	Shares	value	Shares	value	Shares	value
GPPC Chemical Corporation Total	Common Shares Preferred Shares	6,478 1,776 8,254	$ 149,746 49,858 $ 199,604	－－－	$ - － $ -	3,350 － 3,350	$ 77,434 － $ 77,434	3,128 1,776 4,904	$ 72,312 49,858 $ 122,170

(1) As of December 31, 2018 and 2017, the value of profits from disposing of the Company’s shares by subsidiaries and transferred to be capital reserve - transaction value of treasury stock was T$28,266 thousand and T$13,455 thousand, respectively.
(2) From January 1 through December 31, 2018 and 2017, the value of cash dividends received by subsidiaries from the parent company and transferred to be capital reserve - transaction value of treasury stock was $3,089 thousand and $9,320 thousand, respectively.
(3) As of December 31, 2018 and 2017, the fair value of the Company’s shares held by subsidiaries was $66,946 thousand and $158,686 thousand, respectively. .
(4) The Company’s shares held by subsidiaries are treated as the treasury stock and are not entitled to participation in the capital increase in cash and voting rights of

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the Company. The remaining rights are the same as those of general shareholders.

(XXXV) Uncontrolled Equity

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January 1 to
January 1 to
Item December 31,
December 31, 2017
2018
Balance at beginning of term $ 2,765,917 $ 2,602,695
－
Effect of Retrospective Application and 12,745
Retrospective Restatement
Belong to Uncontrolled Equity:
Net Profits of Current Term 190,635 159,008
Exchange Differences on Translation of ( 4,163) ( 1,587)
Foreign Financial Statements
－
Financial Assets at Fair Value through ( 35,206)
Other Comprehensive Income
Unrealized Income
－
Unrealized Income from Financial 62,097
Assets Available for Sale
Re-measurement of Defined Benefit ( 1,837) 1,942
Plans
－
Income tax related to other 305
comprehensive income
As a result of accepting gifts additional 4 4
paid-in capital
Issuance of Cash Dividend ( 46,416) ( 40,616)
－
Cash Capital Decrease of Subsidiary ( 17,626)
Balance at end of term $ 2,881,984 $ 2,765,917
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(XXXVI) Operating Revenue

Operating Revenue
Item Income from contracts with customers Sales income Labor Income Total	January 1 to December 31, 2018 $ 22,441,811 2,299,327 $ 24,741,138	January 1 to December 31, 2018
		$ 20,819,780 2,531,185 $ 23,350,965

(1) Breakdown of income from contracts with customers

Income of the Group is from products and services that are transferred at a certain time point and provided and gradually transferred with time. The income can be further broken down into the following primary product lines and types of service:

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Primary product lines and types of January 1 to January 1 to
service December 31, 2018 December 31, 2017
Sales income
Petrochemical products $ 10,623,421 $ 10,617,487
Plastic product 6,785,217 6,106,114
Hydrogen product 131,381 115,857
Steam power products 427,396 391,946
Nylon product 2,682,897 1,939,323
Packing material product 1,775,236 1,643,053
Plastic raw materials resale 16,263 6,000
Subtotal 22,441,811 20,819,780
Labor Income
Advertising service 1,318,542 1,495,553
Video service 706,122 706,122
Authorization and other services 274,663 329,510
Subtotal 2,299,327 2,531,185
Total $ 24,741,138 $ 23,350,965
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2. Balance of Contract

Related contract assets and liabilities recognized by the Group that are related to contracts with customers are as follows:

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

Item December 31, 2018 December 31, 2017
Contract Assets - Current (Note 1)
Advertising contract $ 25,250
Licensing agreement 35,114
Total $ 60,364
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The credit risk for the Group’s contract assets after initial recognition is not increased. It is expected that the credit loss rate is 0%.

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

Item December 31, 2018 December 31, 2017
Contract Liability - Current (Note 1)
Advertising contract $ 269
Licensing agreement 22,669
Product Sales 20,881
Total $ 43,819
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(1) The Group started to adopt related requirements in IFRS 15 on January 1, 2018. As agreed in the contract, the product or service is already transferred to the client. Rights for which considerations are collected unconditionally, however, are not available are listed under contract assets. Obligations for which considerations are already collected as agreed upon in the contract or are collectible from the customer and hence the product or service needs to be transferred to the client are listed as contract liabilities. The amount re-categorized from pre-collected payments to contract liabilities as of January 1, 2018 totaled $ 43,930 thousand.
(2) Major variation in contract assets and contract liabilities
The variation in contract assets and contract liabilities mainly comes from the time point when obligations are fulfilled and the difference in customer payment time points. There are no major changes in the contract assets and contract liabilities from January 1 through December 31, 2018 of the Group.
(3) Contract liabilities at beginning of term are recognized as income.

Item Contract liabilities balance at beginning of term are recognized as income Advertising contract Product Sales Total	January 1 to December 31, 2018
	$ 4,363 39,567 $ 43,930

(4) Contract fulfillment obligations already satisfied in the previous term are recognized as income for the current term.
There were no contract fulfillment obligations that were already satisfied (or partially satisfied) from January 1 through December 31, 2018 of the Group. Due to the variation in the transaction price or the variation in consideration recognition limits, however, income recognition was adjusted for the current term.
(5) Contracts with customers yet to be fulfilled

For contracts with customers yet to be fulfilled as of December 31, 2018, except for those described below, the remainder, as long as the duration of the contract is less than a year, is expected to be fulfilled within the coming year and be recognized as income.

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The transaction prices spread out in fulfillment obligations yet to be completely satisfied and time points when they are expected to be recognized as income by the Group are as follows:

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December 31, 2018
Expected to perform and Licensing
Video contract Total
recognize income agreement
January 1, 2019～December
$ 706,122 $ 131,050 $ 837,172
31, 2019
January 1, 2020～December
706,122 123,884 830,006
31, 2020
January 1, 2021～December －
102,383 102,383
31, 2021
January 1, 2022～December －
69,621 69,621
31, 2022
January 1, 2023～December －－－
31, 2023
Total $ 1,412,244 $ 426,938 $ 1,839,182
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3. Contract cost-related assets: None.

(XXXVII) Other Income

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

January 1 to January 1 to
Item
December 31, 2018 December 31, 2017
Interest income $ 67,249 $ 34,992
Rent income 6,515 6,203
Dividend Income 156,062 154,091
－
Subsidization Income 3,700
Defective Income 1,896 3,338
Remunerations for
directors/supervisors and traveling 23,960 17,286
expenses Income
Overpayment Refunds of Air －
3,042
Contaminant Income
Others 6,445 9,104
Total $ 268,869 $ 225,014
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(XXXVIII) Other Profits and Losses

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January 1 to January 1 to
Item
December 31, 2018 December 31, 2017
Net (Profit) Loss of Financial Assets at $ 20 [($ 24)]
Fair Value through Income
Net Loss Disposal of Property, Plant, and
( 943) ( 5,779)
Equipment
Profits from Disposing Investments 94 57
Net foreign currency exchange benefit
91,458 ( 37,315)
(loss)
－
Impairment Loss of Financial Assets ( 540)
Impairment Loss of Non-Financial Assets ( 10,007) ( 22,366)
Spares short and retirement loss ( 757) ( 10,007)
Direct operation cost of investment real
( 1,023) ( 1,135)
estate
－
Legal litigation settlement loss ( 15,000)
Others ( 1,181) ( 2,386)
Total $ 62,661 ($ 71,995)
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(XXXIX) Financial Cost

XXIX) Financial Cost
Item	January 1 to December 31, 2018	January 1 to December 31, 2017
Interest Expense Decrease: the capitalization amount of the assets that meet the requirements Total	$ 1,835 － $ 1,835	$ 1,438 － $ 1,438

(XXXX) Employee benefits, depreciation, depletion and amortization expenses

Property Employee Benefits Expense Salary Expense Labor Insurance Expense Pension Expense Other Employee Benefits Expense Depreciation Cost (Note) Amortized Expenses Total	January 1 to December 31, 2018 For operating cost For operating expense Total $ 585,292 $ 555,621 $1,140,913 40,817 41,689 82,506 17,469 22,708 40,177 15,072 147,681 162,753 751,844 103,694 855,538 737,873 3,362 741,235 $2,148,367 $ 874,755 $3,023,122	January 1 to December 31, 2018 For operating cost For operating expense Total $ 585,292 $ 555,621 $1,140,913 40,817 41,689 82,506 17,469 22,708 40,177 15,072 147,681 162,753 751,844 103,694 855,538 737,873 3,362 741,235 $2,148,367 $ 874,755 $3,023,122	January 1 to December 31, 2017	January 1 to December 31, 2017	January 1 to December 31, 2017
	For operating cost $ 585,292 40,817 17,469 15,072 751,844 737,873 $2,148,367	For operating expense $ 555,621 41,689 22,708 147,681 103,694 3,362 $ 874,755	For operating cost $ 567,277 39,634 19,176 15,120 763,874 917,770 $2,322,851	For operating expense $ 539,589 43,133 23,436 146,827 114,582 4,256 $ 871,823	Total
					$1,106,866 82,767 42,612 161,947 878,456 922,026 $3,194,674

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Note: Depreciation cost of investment real estate recognized in the consolidated financial statement from January 1 through December 31, 2018 and 2017 was $1,023 thousand and $1,135 thousand, respectively and was listed under extra incomes and expenses - other profits and losses.
As is required by the Articles of Incorporation, the Company shall assign 1% of the profitability for the current year to be the employee remunerations and no more than 2% of profitability for the current year to be the remunerations for directors and supervisors. In cases of accumulated deficits, however, the Company shall make up for them. The profitability for the current year as indicated in the preceding paragraph refers to the profits before remunerations assigned to employees and directors and supervisors are subtracted from pre-tax profits for the current year.
The administration of the Company estimates the remunerations payable to employees and directors and supervisors according to the profitability for the said year and takes into consideration expected value to be released and the upper and lower limit ratios defined in the Articles of Incorporation. The value prior to deduction of remunerations for employees and directors and supervisors from the pre-tax net profit is followed for the estimation. The estimated remunerations for employees between January 1 and December 31, 2018 and 2017 of the Company were $37,478 thousand and $38,908 thousand, respectively, and those for directors and supervisors were $74,956 thousand and $77, 801 thousand, respectively. In case of major variation in the value to be released as decided by the Board of Directors after the date when the annual consolidated financial statement is approved and released, such variation is adjusted from the original recognition to be the annual expenses. If there is still variation in the annual financial statement after it is approved and released, it will be handled as a variation in the accounting estimates and will be adjusted and booked in the following year.
The Company’s Board of Directors decided on March 21, 2019 and March 22, 2018, respectively, to distribute remunerations for employees in 2018 and 2017 to be $37,478 thousand and $38,900 thousand, respectively and remunerations for directors and supervisors to be $74,956 thousand and $77,801 thousand. The amounts decided to be distributed as mentioned above did not show significant

221

differences from the estimates listed as expenses in the Company’s 2018 and 2017 financial statements. The above-mentioned remunerations are released in cash.

For information on the remunerations for the Company’s employees and directors and supervisors, you may search the Market Observation Post System of Taiwan Stock Exchange.

(XXXXI) Income Tax

Components of Income Tax Expenses (Profits):
(1) Income tax recognized as part of profits and losses

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

January 1 to January 1 to
Item December 31, December 31,
2018 2017
Current income tax expense $ 892,969 $ 619,131
Deferred income tax expenses (profits)
Temporary difference between original 19,240 116,078
generation and rotation
－
Impact on a change in the exchange ( 1,477)
rate
Impact on the exchange rate ( 6) 9
Deferred income tax (increase) reduces 17,757 116,087
net change
Previous annual income tax adjustment ( 4,519) 207
Income tax recognized as part of profits $ 906,207 $ 735,425
and losses expense
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(2) Income tax recognized as related to other comprehensive income

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

January 1 to January 1 to
Item December 31, December 31,
2018 2017
Deferred income tax
Exchange Differences on Conversion
($ 34,990) $ 36,975
of Foreign Operating Agency
Re-measurement of Defined Benefit
747 ( 425)
Plans
Impact on a change in the exchange －
( 2,905)
rate
Deferred income tax (increase)
( 37,148) 36,550
reduces net change
Income tax recognized as part of other
comprehensive profits and losses ($ 37,148) $ 36,550
expense
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Adjustments made to the income expenses obtained from accounting and recognized

as part of profits and losses for the current year are as follows:

Item Income from Continuing Operation before Tax (Loss) Calculating the income tax before tax (profit) at a statutory rate Effect on income tax of adjusted items Effect on items excluded in the determination of taxable income The tax amount to be paid by the minimum tax system Undistributed surplus plus income tax Deduction of losses incurred in the current period Deductible losses for the current period Current offset of investment offset Current income tax expense Deferred income tax (increase) reduces net change Previous annual income tax adjustment Income tax recognized as part of profits and losses expense	January 1 to December 31, 2018 $ 4,056,948 811,390 38,972 － 228,641 － ( 1,968) － ( 184,066) 892,969 17,757 ( 4,519) $ 906,207	January 1 to December 31, 2017
		$ 4,183,075
		711,123 13,965 1,555 152,047 179 ( 322) － ( 259,416)
		619,131 116,087 207 $ 735,425

The applicable tax rate for entities of the Group under the Income Tax Act of the Republic of China is 17% in 2017. After the revisions made in February 2018, the tax rate for business income tax has been adjusted from 17% to 20% in the Income Tax of the Republic of China, effective in 2018. In addition, the tax rate applicable to undistributed earnings of 2018 will be reduced from 10% to 5%.

The tax rate applicable to subsidiaries in Mainland China is 25%. The taxable amounts in other jurisdictions are calculated according to the tax rate applicable in each of the said jurisdictions. The Group has evaluated related impacts from income tax regarding the said variation in the tax rate.

3. Balance of income tax assets (liabilities) for the current term

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

Item December 31, 2018 December 31, 2017
----- End of picture text -----

Item	December 31, 2018	December 31, 2017
Current income tax assets
Advanced income tax	$ 310	$ 55

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Current income tax liability Current income tax expense Decrease: Current prepaid income tax credit Total	$ 892,969 ( 306,608) $ 586,361	$ 619,131 ( 217,094) $ 402,037

4. Balance of deferred income tax assets (liabilities)

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

January 1 to December 31, 2018
Other
Balance at Recognized as Comprehensive
Balance at end
Item beginning of part of profits Income
of term
term and losses Recognition of
Losses
Deferred income tax assets
Unrealized exchange
$ 3,549 ($ 1,660) $ - $ 1,889
loss
Inventory decline and －
5,729 1,813 7,542
sluggish loss
Employee leave payment －
2,901 500 3,401
obligation
Defined Employee
17,750 ( 130) 2,158 19,778
Benefit Plan
Impairment assessment －
10,847 3,411 14,258
of tangible assets
－
Unrealized Gain on Sale 2,264 ( 1,314) 950
－－
Loss deduction (Note) 179 ( 179)
－
Others 1,686 ( 146) 1,540
Total $ 44,905 2,295 2,158 $ 49,358
Deferred income tax
liability
Unrealized exchange －
$ - 97 $ 97
profit
Investment in Affiliates 201,497 20,029 ( 34,990) 186,536
Depreciation expense tax －
530 ( 74) 456
difference
Land value added tax －－
1,062,196 1,062,196
preparation
Total $ 1,264,223 20,052 ( 34,990) $ 1,249,285
Net increase (decrease)
($ 17,757) $ 37,148
change
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----- Start of picture text -----

January 1 to December 31, 2017
Other
Balance at Recognized as Comprehensive
Balance at end
Item beginning of part of profits Income
of term
term and losses Recognition of
Losses
Deferred income tax
assets
Unrealized exchange
$ - $ 3,549 $ - $ 3,549
loss
Inventory decline and －
5,169 560 5,729
sluggish loss
Employee leave －
2,928 ( 27) 2,901
payment obligation
Defined Employee
17,359 ( 34) 425 17,750
Benefit Plan
Impairment assessment －
7,051 3,796 10,847
of tangible assets
Unrealized Gain on －
4,578 ( 2,314) 2,264
Sale
－－
Loss deduction (Note) 179 179
－
Others 1,092 594 1,686
Total $ 38,177 6,303 425 $ 44,905
Deferred income tax
liability
Unrealized exchange －
$ 1,064 ( 1,064) $ -
profit
Investment in Affiliates 40,811 123,711 36,975 201,497
Depreciation expense －
787 ( 257) 530
tax difference
Land value added tax －－
1,062,196 1,062,196
preparation
Total $ 1,104,858 122,390 36,975 $ 1,264,223
Net increase (decrease)
($ 116,087) ($ 36,550)
change
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Note: Deduction for deficits is recognized as part of profits and losses. The amount includes the deduction generated/applied for the current term and adjustment in the variation from previous annual estimates.

Deferred income tax asset items that are not very likely realizable and hence are not recognized of the Group are as follows:

225

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

Item December 31, 2018 December 31, 2017
Deferred income tax assets
Defined Employee Benefit
$ 8,446 $ 6,854
Plan
Impairment Loss of
686 583
Financial Assets
Loss deduction 5,091 4,327
Total $ 14,223 $ 11,764
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Unrecognized deferred income tax liabilities relevant to investment
The temporary difference associated with the invested subsidiary, if the time point for reversal of the temporary difference can be controlled by the Group, is very unlikely to be reversed in a foreseeable future; therefore, deferred income tax liabilities are not recognized. The taxable temporary difference in the deferred income tax liabilities relevant to invested subsidiaries and yet to be recognized as of December 31, 2018 and 2017 was $1,097,761 thousand and $792,605 thousand, respectively.
7.For the business income taxes of the Company and domestic subsidiaries in the Group, except for GPPC Chemical Corporation and GPPC Investment Corporation, for which it was approved to 2017, the remainder was approved by the taxation agency to 2016.
Due to the fact that uncertainties remain for the distribution of earnings as determined through the 2019 shareholders' meeting, consequences of the additional potential income tax levied of undistributed earnings of 2018 cannot be reliably determined yet .

(XXXXII) Variation in Liabilities from Fund-raising Activities

Item January 1, 2018 Net change in cash flow Non-change in cash flow - rented assets December 31, 2018	Short-term Borrowing $ 37,581 ( 34,748) － $ 2,833	Lease Payable $ 1,822 ( 2,776) 3,889 $ 2,935	Guarantee Deposits
			$ 1,420 3,542 － $ 4,962

(XXXXIII) Earnings per Share

The basic earnings per share of the Company is calculated by the net profits (losses) for

226

the current term divided by the number of weighted average common stock shares outstanding. The additional shares as a result of undistributed earnings or capital reserve transferred capital increase, on the other hand, is adjusted and calculated retroactively. If the Company may choose to issue employee remunerations in the form of shares or cash, in the calculation of diluted earnings per share, it is assumed that issuance of shares will be adopted for employee remunerations and the weighted average shares outstanding are included in the calculation when the said common stock exercises the diluting effect in order to calculate the diluted earnings per share. When the diluted earnings per share are calculated prior to issuance of shares as employee remunerations as determined in the following year, the diluting effect from the said potential common stock shall continue to be taken into consideration, too.

January1 to December 31,	January1 to December 31,	January1 to	December 31, 2017	December 31, 2017
After-tax amount $ 2,960,106 ( 12,000) 2,948,106 － $ 2,948,106	Weighted average number of shares outstanding (thousand shares) 905,338 2,005 907,343	After-tax amount $ 3,288,642 ( 12,000) 3,276,642 － $ 3,276,642	Weighted average number of shares outstanding (thousand shares) 900,971 1,535 902,506	(NT$) Earnings per share
				$ 3.64
				$ 3.63

VII. Related Party Transaction

(I) Parent company and the ultimate controller

The Company is the ultimate controller of the Group.

227

(II) Name of related party and the relationship

Name of related party Relationship with the Group Zhenjiang Chimei Chemical Company Affiliate Coos Venture Capital Corp. Substantially related party Heqiao International Investment Substantially related party China Development Asset Management Substantially related party All directors, general manager, and vice Primary management

(III) Major transactions with related parties

When preparing the consolidated financial statement, transactions between the Company and its subsidiaries (that is, related parties of the Company), balance in the account, income, and expenses have all been written off and hence are not disclosed in the note. Please refer to Note 13(1)(2)-11 for details. The transactions between the Group and related parties are as follows:

(III) Major transactions with related parties

1. Sales

Substantially related party Affiliate	January 1 to December 31, 2018 $ 3,382	January 1 to December 31, 2017 $ 3,650

There are no significant differences in the selling price and sales trading conditions for related parties and those for ordinary customers of the Group.

The creditor’s rights and debts between the Company and related parties (all without including the interest) are as follows:

Accounts receivable

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

Substantially related party December 31, 2018 December 31, 2017
Affiliate $ 735 $ -
3. Assets for rent
(1) Rent income
January 1 to January 1 to
Lessee/Substantially Leased
Leased Period December 31, December
related party Object
2018 31, 2017
Substantially related 10F, No. 1, August 16, 2018 ~
party Sec. 4, August 15, 2019 and
Nanjing East March 31, 2019. $ 119 $ 119
Road, Taipei (Renewal)
City
----- End of picture text -----

228

(2) Pre-collected rent

Item Substantially related party	December 31, 2018 $ 71	December 31, 2017 $ 71

(3) The above-mentioned properties for rent refer to part of the offices of the Group put up for rent. The rent is negotiated between the parties reflective of the market price and calculated and included in the lease contract. The rent is collected on a yearly basis.

4. Rented assets

(1) Rent expenditure

Leaser/Substantially related party Substantially related party	Leased Object 9F., No. 269, Sec. 1, Dunhua South Rd., Taipei City	Leased Period March 1, 2017～ February 28, 2027	January 1 to December 31, 2018 $ 5,943	January 1 to December 31, 2017 $ 1,981

(2) Refundable deposits

Item Substantially related party	December 31, 2018 $ 1,040	December 31, 2017 $ 1,040

(3) The Group rented from a substantially related party the property on the 9[th] floor at No. 269, Section 1, Dunhua South Road, Taipei City and the auxiliary parking space(s). There was no rent expenditure between March 1 and August 31, 2017 due to waiver of rent to facilitate remodeling.
(4) The Group has signed a contract for renting the property for operational purpose in the future with the substantially related party and as of December 31, 2018 and 2017, the forward notes (not tabulated) already issued as agreed upon were consistently $1,040 thousand to facilitate cashing at time of actual transaction in the future.
(5) The rent is negotiated between the parties reflective of the market price, calculated, and included in the lease contract and the forward note is issued to facilitate cashing by the month.

229

(IV) Information on the compensation of the primary management

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

January 1 to January 1 to
Item
December 31, 2018 December 31, 2017
Salary and other short-term
$ 176,740 $ 169,609
employee benefits
－－
Separation Benefits
Post-retirement Benefits 4,165 4,340
－－
Other long-term benefits
－－
Share-based Payment
Total $ 180,905 $ 173,949
----- End of picture text -----

VIII. Pledged Assets

(I) Pledging of Real Estate, Plants and Equipment

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

December 31, December 31,
Item Arrest (quality) use
2018 2017
Comprehensive credit
Land $ 3,209,800 $ 3,209,800
line, purchase guarantee
House and Comprehensive credit
401,274 440,651
Building line, purchase guarantee
Machinery and Comprehensive credit line
1,025,622 1,165,511
Equipment guarantee
Total $ 4,636,696 $ 4,815,962
(II) Pledging of Other Assets
December 31, December 31,
Item Arrest (quality) use
2018 2017
Bank savings Reserve account $ 11,371 $ 12,563
----- End of picture text -----

IX. Major or Liable and Unrecognized Contract Commitments
Endorsement and guarantee: None
Notes and certificates of indebtedness for refundable deposits
- (1) The Group issues promissory notes showing the specific amount and certificates of indebtedness to financial institutions to show its commitment to paying off the loans. As of December 31, 2018 and 2017, the amounts were USD13,000 thousand and NTD5,142,000 thousand and USD36,000 thousand and NTD4,522,000 thousand, respectively.
- (2) In order to obtain the exclusive broadcasting right of SBL games and exclusive business soliciting right through field advertisements, the Group issued the

230

promissory note to the Chinese Taipei Basketball Association. As of December 31, 2018 and 2017, the amount was consistently $10,000 thousand.

Notes and collaterals for guarantee deposits
The notes and collaterals for guarantee deposits collected by the Group to ensure fulfillment of contracts were worth NTD160,332 thousand, SGD208 thousand, EUR730 thousand, USD2,710 thousand, and JPY1,850 thousand and NTD195,082 thousand, SGD208 thousand, EUR730 thousand, USD2,710 thousand, and JPY127,850 thousand as of December 31, 2018 and 2017.
For the sake of purchasing materials and for other purposes, the Group authorized financial institutions to provide the performance bond. As of December 31, 2018 and 2017, it was $6,000 thousand and $8,285 thousand, respectively.
The balance of the Letters of Credit issued by the Group yet to be used as of December 31, 2018 and 2017 totaled USD8,225 thousand, NTD670,446 thousand, EUR59 thousand, and USD5,271 thousand, and NTD1,284,800 thousand, respectively.
As of December 31, 2018 and 2017, the major capital expenditure on real estate, plants and equipment for which a contract had been signed yet to be paid was $39,973 thousand and $178,608 thousand, respectively.
As of December 31, 2018 and 2017, the amount yet to be paid for films to be delivered under the film purchase contract and program production outsourcing contract already signed by the Group was 1,183,857 thousand and 1,281,637 thousand, respectively.
As is required by the contract on the purpose of raw materials entered into by and between the Group and CPC Corporation, Taiwan (CPC Corporation), the Group shall purchase ethylene, benzene, and butadiene in certain quantities from CPC Corporation each year. If the annual purchases made by the Group fall short of the minimum contract quantities, CPC Corporation may adjust the supply volume for the coming year down, depending on the circumstances. In addition, the ethylene, benzene and butadiene that the Group promises to purchase from CPC Corporation are meant as the raw materials for the factory to produce styrene and acrylonitrile butadiene styrene copolymer resins. Unless with approval from government agencies or as internal allocation to be used as the raw materials for petrochemical products, they may not be used for other purposes or be re-sold (if, in order to meet the needs for allocating petrochemical products and with prior written consent from CPC Corporation in advance, the Group may assign all or part of the ethylene, benzene, and butadiene to be used by petrochemical users of CPC Corporation as raw materials for petrochemical products). Otherwise, CPC Corporation may discontinue the supply of ethylene, benzene, and

231

butadiene at any time and terminate the contract.

In order to meet the needs of manufacturing ABS products, the Group purchases butadiene from Formosa Petrochemical Corporation as the raw material and signs the trading contract. It is guaranteed in the contract that the Group shall purchase at least 100 tons of butadiene a month from Formosa Petrochemical Corporation to be the raw material for products such as ABS.
In order to meet the needs of manufacturing ABS products, the Group purchases propenenitrile from China Petrochemical Development Corporation as the raw material and signs the trading contract. It is guaranteed in the contract that the Group shall purchase at least 3,600 to 7,200 tons of China Petrochemical Development Corporation a month to be the raw material for products such as ABS.
Major Operation Agreement
- (1) Income
The important long-term contracts that have already taken effect such as basic channel exclusive dealership contracts and the NBA broadcasting authorization contract signed by the Group in order to meet operational demand are irreversible major operation agreements. The statement of authorization amounts to be collected each year in the future by the Group is as follows:

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

Item December 31, 2018 December 31, 2017
Less than 1 year $ 834,393 $ 118,473
1 to 5 years 972,319 382,203
－－
Over 5 years
Total $ 1,806,712 $ 500,676
----- End of picture text -----

(2) Expenditure

The important long-term contracts that have already taken effect such as the satellite TV supply business authorized products public broadcasting authorization contract, the music and recorded products public playing authorization contract, the SBL games authorization contract, the baseball games broadcasting authorization contract, and lease contracts for offices, parking spaces, properties, and operating sites signed by the Group in order to meet operational demand are irreversible major operation agreements. As of December 31, 2018 and 2017, the forward notes (not tabulated) already issued as agreed upon were $19,185 thousand and $18,761 thousand, respectively, to facilitate cashing at time of actual transaction in the future. The statement of authorization amounts and minimum rents to be paid each year in the

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future by the Group is as follows:

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

Item December 31, 2018 December 31, 2017
Less than 1 year $ 65,373 $ 80,773
1 to 5 years 83,089 142,060
Over 5 years 18,964 24,762
Total $ 167,426 $ 247,595
----- End of picture text -----

X. Major disaster losses: None.

XI. Major subsequent matters: None.

XII. Others

(I) Seasonal or cyclic interpretations of interim operations

Operations of the Group are not affected by seasonal or cyclic factors.

(II) Capital Risk Management

The Group manages capital in order to keep a normal capital foundation and, by optimizing the balance of debts and equities, maximize the rewards for shareholders. Related costs, risks, and returns are examined and measured periodically in order to ensure an optimal profitability level and financial ratio. When it is necessary, various fund-raising methods are adopted in order to balance the overall capital structure and to support the various capital expenditures, operating funds, pay off debits, expenditures on dividends in the future.

(III) Financial Instruments

1. Financial instruments by the type

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

December 31, December 31,
Financial Asset
2018 2017
----- End of picture text -----

III) Financial Instruments 1. Financial instruments by the type Financial Asset	December 31, 2018	December 31, 2017
Financial assets measured at fair value
Measured Compulsorily at Fair Value through Income	$ 39,020	$ -
Financial Assets at Fair Value through Other
Comprehensive Income
Equity Instrument	4,220,226	－
Financial assets available for sale
Equity Instrument	－	3,570,483

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

December 31, December 31,
Financial Asset
2018 2017
----- End of picture text -----

Financial Asset	December 31, 2018	December 31, 2017
Financial assets carried at cost
Equity Instrument	$ -	$ 459,269
Financial assets measured by amortized cost
Cash and cash equivalents	2,729,454	－
Contract Assets - Current	60,364	－
Notes receivable and accounts (including related parties)	3,001,297	－
Other receivables	81,641	－
Other financial assets－current	2,698,945	－
Refundable deposits	16,664	－
Loans and accounts receivable
Cash and cash equivalents	－	2,122,753
Bills receivable and accounts receivable	－	3,251,907
Other receivables	－	53,425
Other financial assets－current	－	1,676,020
Refundable deposits	－	17,089
Financial Liability
Financial liability measured by amortized cost
Short-term Borrowing	2,833	37,581
Notes payable and accounts	1,548,995	1,944,518
Other payables	669,260	636,223
Guarantee Deposits	4,962	1,420

2. Financial risk management policy

Daily operations of the Group are subject to impacts by multiple financial risks, including market risk (exchange rate risk, interest rate risk, and price risk), credit risk, and liquidity risk. In order to reduce related financial risks, the Group is devoted to identify, evaluate, and circumvent uncertainties on the market and to reduce potential undesirable impacts of variation on the market on the financial performance of the Company.

For the above-mentioned financial risks, the Group has established suitable policies, procedures, and internal control according to related regulations. Important financial activities need to be reviewed by the Board of Directors according to applicable regulations and the internal control system. While a financial plan is being implemented, the Group needs to strictly follow applicable financial operating procedures about the overall financial risk management and division of

234

responsibilities.

Property and Extent of Major Financial Risks
(1) Market Risk

The market risk of the Group is the risk of volatility in fair value or cash flows of financial instruments as a result of the varying prices on the market. Mark risk mainly includes exchange rate risk, interest rate risk, and price risk.

Exchange Rate Risk

Due to the fact that the business that the Group is engaged in involves several non-functional currencies (the functional currency for the Company and some subsidiaries is New Taiwan Dollar and that for some subsidiaries is US Dollar, Hong Kong Dollar, Malaysian Dollar, and RMB), it is under the impacts of fluctuating exchange rates. Information about foreign currency assets and liabilities that are subject to impacts of major fluctuations in the exchange rate is as follows: (including currency items valued in non-functional currencies that are already written off in the consolidated financial statement)

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

December 31, 2018 December 31, 2017
Foreign
Foreign
currency
currency
Foreign Foreign against
Item (Foreign currency: against New Taiwan New Taiwan
currency currency functional
functional currency) functional Dollar Amount Dollar Amount
amount amount currency
currency
exchange
exchange rate
rate
----- End of picture text -----

		ex	cange rate				rate
Financial Asset
Monetary item
USD: NTD	$	66,032	30.715	$2,028,173	$	58,883	29.76	$1,752,358
USD: RMB		224	6.8683	6,880		180	6.5192	5,357
USD: MYR		4	4.3188	123		16	4.3188	476
USD: HKD		94	7.8335	2,887		94	7.8172	2,797
RMB: NTD		755	4.4720	3,376		799	4.5650	3,647
RMB: USD		3,648	0.1456	16,314		－		－
							－
RMB: HKD		3	0.1456	13		3	1.1991	14
HKD: RMB		43	0.8768	169		43	0.8340	164
SGD: MYR		21	3.1609	472		19	3.1476	423
Non-monetary item
RMB: USD	1,573,524		0.1456	7,036,799	1,376,620		0.1534	6,284,270
Financial Liability
Monetary item
USD: NTD		11,197	30.715	343,916		12,578	29.76	374,321
USD: RMB		266	6.8683	8,170		2,046	6.5192	60,889
USD: MYR		246	4.3188	7,556		385	4.3188	11,458
HKD: RMB		－	－	－		9,100	0.8340	34,644
EUR: NTD		92	35.20	3,238		29	35.57	1,032

235

Note: When non-monetary assets in foreign currencies are measured at historical exchange rate on the transaction date, due to the fact that there are no major impacts on the consolidated financial statement, they are not disclosed.

The sensitivity analysis of the exchange rate risk facing the Group focuses mainly on the primary monetary items and non-monetary items in foreign currencies on the end date of the financial reporting period and the impacts on the profits and losses and equities of the Group from appreciation/depreciation of related foreign currencies. When the foreign currency exchange rate rises/falls by 1%, the after-tax net profits of the Group from January 1 through December 31, 2018 and 2017 would increase/decrease by $13,564 thousand and $10,648 thousand, respectively, and the equities would increase/decrease by $70,368 thousand and $62,843 thousand, respectively.

In addition, the net foreign currency exchange profits or losses (realized or not realized) recognized for January 1 through December 31, 2018 and 2017 of the Group was $91,548 thousand and (37,315) thousand, respectively. Due to the numerous types of foreign currencies involved in monetary transactions, in practice, it is impossible to clearly define the types of exchange profits or losses and disclose them by each foreign currency. Therefore, they are expressed through an overview of amounts.

 Interest Rate Risk

The interest rate risk is the risk of volatility in the fair value or cash flows in the future of financial instruments as a result of changing interest rates on the market. The interest rate risk of the Group mainly comes from borrowings at floating interest rates. Some risks, however, are written off by cash and cash equivalents held at floating interest rates. Because the Group periodically evaluates the changing trends in interest rate and responds in a timely manner, it is expected that no major risks associated with changing interest rates on the market will occur. If the borrowing interest rate increases or decreases by 10 base points, with all the other factors remaining unchanged, the after-tax net profits of the Group for January 1 through December 31, 2018 and 2017 will decrease or increase by $37 thousand and $55 thousand, respectively.

 Price Risk

Due to the fact that investments held by the Group are mainly categorized as

236

financial assets at fair value through other comprehensive income in the Balance Sheet (financial assets available for sale and carried at cost in 2017), the Group is exposed to the price risk of equity instruments. In order to manage the price risk associated with investments in equity instruments, the Group diversify the portfolio and the diversification approach is based on the upper limits set by the Group. Prices of financial instruments such as financial assets at fair value through other comprehensive income (financial assets available for sale and carried at cost in 2017) invested in by the Group will be affected by the uncertainty of future values of the said investment target. If the price of such financial instruments rises or falls by 1%, with all the other factors remaining unchanged, the after-tax net profits for January 1 through December 31, 2018 and 2017 would decrease or increase by $390 thousand and $0, respectively and the equities would increase or decrease by $42,202 thousand and $35,705 thousand, respectively.

(2) Credit risk

Credit risk is the risk of financial losses suffered by the Group as a result of the customer or the counter party of a financial instrument unable to fulfill contract obligations. The credit risk of the Group is caused the operating activities (mainly accounts and notes receivable) and financial activities (mainly bank deposits and various types of financial instruments). Operation-related credit risk and financial credit risk are managed separately.

 Operation-related credit risk

The operating unit follows the Group’s policy, procedure, and control over customer credit risk while managing customer credit risk. The credit risk evaluation of all customers includes comprehensive evaluation of the customer’s financial standing, rating from a credit evaluation institution, prior transaction experiences, current economic environment, and internal evaluation done by the Group, among other factors. In addition, the Group uses certain credit reinforcing instruments when the timing is right (such as advance collection of payments) in order to reduce the credit risk of specific customers.

 Financial Credit Risk

The Finance Department of the Group follows the corporate policy on the management of the credit risk of bank deposits and other financial instruments. Due to the fact that the Group’s counter parties are determined through the internal control procedure and are banks with good credit ratings and financial

237

institutions and companies or organizations of the investment grade and higher that are free of major contract fulfillment concerns, there is no major credit risk.

Information on Credit Risk of Accounts Receivable

The Group assumes adopting the premises provided in IFRS 9 that when payment terms are past due by more than 30 days as agreed upon in the terms and conditions of a contract, it is considered that the credit risk for the financial assets since initial recognition has significantly increased. When the payment terms are more than 365 days past due as agreed upon in the terms and conditions of the contract or when it is quite impossible for the borrower to fulfill the credit obligations by paying the full amount to the Group, breach of contract is considered by the Group to have occurred to the financial assets.

In order to reduce the credit risk, the management of the Group assigns a specialized team to take charge of deciding the loan limit, loan approval and other monitoring procedures in order to ensure that appropriate action has been taken for recovery of accounts receivable. In addition, the Group reviews the recoverable amounts of accounts receivable one by one on the balance sheet date in order to ensure that appropriate impairment losses have been appropriated for accounts receivable that cannot be recovered. For information on the aging analysis of accounts receivable and the variation in allowance loss, please refer to Notes 6(3) and (4) for details.

Exposure to Credit Risk

Quality of credit of financial institutions that the Group does business with is optimal and the Group does business with multiple financial institutions in order to diversify credit risk. The possibility of expected occurrence of defaults is quite minimal. In addition, all the sales of the Group only involve approved third parties with optimal credit ratings. Credit limit is given to the customer according to the loan procedure. Meanwhile, the credit standing of the customer is kept track of continuously with the possibility of recovering accounts receivable being evaluated periodically and adequate allowance loss being appropriated. Therefore, it is believed by the administration that there is no significantly concentrated credit risk for the accounts receivable of the Group. In other words, the maximum exposure amount to credit risk on the balance － sheet date of cash and cash equivalents, contract assets current, accounts － receivables and other financial assets current is equal to the book value of the said financial assets.

238

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

December 31, 2018 December 31, 2017
Maximum credit Maximum credit
Financial product Book value Book value
exposure amount exposure amount
----- End of picture text -----


Cash and cash		$ 2,729,454	$	2,729,454	$	2,122,753	$	2,122,753
equivalents
Contract Assets -		60,364		60,364	－		－
Current
Notes receivable		394,217		394,217		392,248		392,248
Accounts receivable		2,607,080		2,607,080		2,859,659		2,859,659
(including	related
parties)
Other receivables		81,641		81,641		53,425		53,425
Other financial	assets	2,698,945		2,698,945		1,676,020		1,676,020
－current

(3) Liquidity Risk

Liquidity risk refers to the risk generated because of the impossibility to settle positions as expected. The Group primarily allocates funds by borrowing from financial institutions and instruments such as cash and cash equivalents in order to accomplish the goal of utilizing funds and stabilizing funds flexibly. The capital and operating funds of the Group are sufficient to support fulfillment of all contract obligations; therefore, there is no liquidity risk as a result of the impossibility to raise funds to fulfill contract obligations.

The table below summarizes the non-derivative financial liabilities of the Group. They are grouped by the related expiration dates. The table is prepared according to the earliest date possible for mandated repayment and the cash flow yet to be discounted. The Group does not expect a significantly earlier time point of occurrence for the analysis of cash flows by the expiration date or a significantly different value from the actual value. The amount of interest yet to be discounted for the interest cash flows paid at the floating rate is inferred according to the yield curve on the balance sheet date. In other words, the amount of the floating rate instrument for non-derivative financial liabilities will change as a result of the difference between the floating rate and the interest rate estimated on the balance sheet date.

December 31, 2018 Within 6 6 months to Over 5 Contract of Item 1 to 2 years 2 to 5 years Book value months 12 months years Cash Flows

239

Non-derivative
financial liability
Short-term Borrowing	$	2,857	$	-	$	-	$	-	$	-	$	2,857	$	2,833
Notes Payable		78,620		－		－		－		－		78,620		78,620
Accounts Payable		1,470,375		－		－		－		－		1,470,375		1,470,375
Other payables		667,070		2,190		－		－		－		669,260		669,260

December 31, 2017

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

Within 6 6 months to Over 5 Contract of
Item 1 to 2 years 2 to 5 years Book value
months 12 months years Cash Flows
Non-derivative
----- End of picture text -----

Non-derivative
financial liability
Short-term Borrowing	$	37,784	$	-	$	-	$	-	$	-	$	37,784	$	37,581
Notes Payable		74,861		－		－		－		－		74,861		74,861
Accounts Payable		1,869,657		－		－		－		－		1,869,657		1,869,657
Other payables		632,546		3,677		－		－		－		636,223		636,223

(IV) Information on Fair Value

1. Fair Value Grade

In order to evaluate the valuation technique adopted for the fair value of financial and non-financial instruments, the fair value, by its observable extent, is divided to Grade 1 to Grade 3. 1. Each grade of fair value is defined as follows:

Grade 1 is the public quotation (without adjustment) of the same asset or liability from an active market.
Grade 2 is the fair value inferred with the input parameters that are directly (price) or indirectly (inferred from price) observable belonging to the said asset or liability besides the public quotation in Grade 1.
Grade 3 is the fair value inferred with the input parameters (not observable parameters) of the asset or liability with a valuation technique that is not based on observable market data.
Financial instruments not measured at fair value
The book value of financial instruments not measured at fair value of the Group (including cash and cash equivalents, contract assets - current, notes receivable, accounts receivable (including related parties), other receivables, other financial assets - current, short-term borrowings, notes payable, accounts payable, other payables, etc.) is the reasonable approximation of fair value. The book value of refundable deposits and guarantee deposits shall be a reasonable basis for estimating

240

the fair value due to the fact that the expected cash flows discounted or not do not result in significant impacts.

For financial and non-financial instruments measured at fair value as of December 31, 2018 and 2017, the Group categorized them according to the nature, characteristics, risk, and fair value grade of the asset and liability. Related information is given below:

Financial and non-financial instruments		December 31, 2018	December 31, 2018	Total $ 39,020 $ 3,494,035 726,191 $ 4,220,226
	First level	Second level Third level $ - $ - $ - $ - － 720,665 $ - $ 720,665 December 31, 2017
Asset Repeatable fair value Measured Compulsorily at Fair Value through Income Other financial assets－current Mutual fund beneficiary certificates Financial Assets at Fair Value through Other Comprehensive Income Financial assets carried - Non-current Domestic Stock of Tsec-Listed Domestic stocks yet to be listed (traded over the counter) Total Financial and non-financial instruments Asset Repeatable fair value Financial assets available for sale －Non-current Domestic Stock of Tsec-Listed	$ 39,020
	$ 3,494,035 5,526 $ 3,499,561
	First level $ 3,570,483	Second level $ -	Third level $ -	Total
				$ 3,570,483

Valuation techniques and assumptions adopted in the measurement of fair value

The fair value of financial and non-financial instruments refers to the current strike value of the said instrument when transacted by the willing party (instead of in a compulsory way or through liquidation). The methods and assumptions applied by the Group in the evaluation of the fair value of financial and non-financial instruments are as follows:

(1) For financial instruments meeting the standard terms and conditions and traded on an active market, the fair value is decided with reference to quotations on the

market, respectively. The closing price of a listed stock is its fair value. For

241

emerging stocks yet to be listed (traded over the counter), the strike price is the fair price. For mutual fund beneficiary certificates, the net worth is the fair value.

(2) For financial instruments that are relatively more complex, the Group measures the fair value according to valuation model independently developed applying the valuation method and techniques widely adopted in the industry. Some of the parameters used in this type of valuation model are not information that can be observed on the market and hence the Group has to make appropriate estimates based on assumptions. The fair value of shares of companies yet to go public (be traded over the counter) (excluding emerging stocks with transactions on an active market) and limited partnerships held by the Group is estimated by the market-based approach or asset-based approach; the determination is based on the valuation of similar companies, quotations provided by a third party, net corporate worth, and operating condition. In addition, the major unobservable input value is mainly liquidity discount. For the impacts that parameters that are not observable on the market have on financial instruments, please refer to the information in Note 12 (4)-10.
(3) The output of the valuation model is an estimated approximate value and the valuation technique might not be able to reflect all factors concerning the financial instruments and non-financial instruments held by the Group. Therefore, estimated values from the valuation model will be adequately adjusted reflective of additional parameters, such as the model risk or liquidity risk, etc. According to the management policy and related control procedures of the Group for the fair value valuation model, the management believes that adjustment of the valuation is appropriate and necessary in order to adequately present the fair value of financial instruments or non-financial instruments in the balance sheet. The price information and parameters adopted during valuation are carefully evaluated and adequately adjusted reflective of the current market status.
(4) The Group includes credit risk valuation adjustments in the calculation and consideration of the fair value of financial instruments and non-financial instruments in order to separately reflect the credit risk of the counter party and the quality of credit of the Group.
Transfer between Grade 1 and Grade 2 fair values from January 1 through December 31, 2018 and 2017: None.
Variation in Grade 3 financial instruments from January 1 through December 31, 2018 and 2017

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Non-derivative equity instrument - stocks yet to be listed (traded over the counter)

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

Item
January 1 to December January 1 to
31, 2018 December 31, 2017
Balance at beginning of term $ - $ -
Effect of IFRS 9 －
698,227
Retrospective Application
－
Acquisition of Current Term 236,237
Disposal of Current Term/ －
( 9,585)
Distributed Capital
－
Transferred Out Third level ( 10,526)
Other Comprehensive Income －
( 199,264)
Recognition of Losses
－
Impact on the exchange rate 5,576
Balance at end of term $ 720,665 $ -
----- End of picture text -----

The Group started to adopt the requirements of IFRS 9 on January 1, 2018 and selectively designated stocks yet to be listed (traded over the counter) and limited partnership equities carried at cost according to IAS 39 to be measured at fair value through other comprehensive income. Due to the fact that sufficient observable market information is lacking for the fair value adopted, they are transferred to be Grade 3. In addition, the trading volume of emerging stocks held and yet to be listed (traded over the counter) was re-evaluated at the end of March 2018 in order to determine whether it belongs to quotation on an active market. Because the steady trading volume on the market is associated with sufficient transaction occurrence frequency and quantity, pricing information can be provided continuously and sufficient observable market information can be obtained. As a result, the Group transferred the fair value adopted at the end of the month of the said event from Grade 3 to Grade 1.
For the valuation procedure of fair values that are categorized to Grade 3 of the Group, the corporate Finance Department is responsible, through division of labor with external professional valuation institutions, for verifying independently the fair values of financial instruments. With independent sources of data, the valuation outcome closely reflects the market status and data are confirmed to be independent, reliable, consistent with other sources, and reflective of enforceable prices. Meanwhile, the required input values and data and any other necessary adjustment in the fair value are updated periodically in order to ensure reasonable valuation outcome.

243

Descriptions are provided below regarding the quantification information of significantly unobservable input values and sensitivity analysis of the variation in significantly unobservable input values of the valuation model adopted for the measurement of Grade 3 fair values:

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

December 31, Major Interval Input value and
Valuation
Item 2018 Fair unobservable (weighted fair value
techniques
value input value average) relationship
Non-derivative equity
----- End of picture text -----

Item Non-derivative equity	December 31, 2018 Fair value	Valuation techniques	Major unobservable input value	Interval (weighted average)	Input value and fair value relationship
instruments:
					The higher the
Stocks yet to be listed (traded over the counter)	$ 720,665	Market approach /	Liquidity discount	10.00%～	liquidity discount, the lower the fair
					value
And limited partnership		Asset-Based Approach		26.25%

The valuation model and valuation parameters adopted by the Group are the results of careful evaluations. Therefore, measurement of fair values is reasonable. The different valuation models or valuation parameters adopted, however, might result in different valuation outcomes. For financial assets and liabilities categorized to be Grade 3, if the valuation parameters vary by 1% base points, impacts on the profits and losses or other comprehensive income for the current term are as follows:

January 1 to December 31, 2018

Item Non-derivative equity instruments: Stocks yet to be listed (traded over the counter) And limited partnership	Input value Liquidity discount	Change +1% -1%	Recognized as part of profits and losses Favorable change Unfavorabl e change $ - $ - $ - $ -	Other Comprehensive Income Recognition of Losses	Other Comprehensive Income Recognition of Losses
			Favorable change $ - $ -	Favorable change $ - $ 6,868	Unfavorable change
					($ 6,744) $ -

244

XIII. Supplementary Disclosures

(I) Related Information on Major Transactions and (II) Reinvestment Businesses (before consolidated write-off):
Lending of funds to others: None.

2. Endorsement and guarantee for others

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

The endorsed party Accumulated ratio
Maximum Endorsement and
Endorsemen Value of of the value of Endorsement and
Single enterprise balance of guarantee provided
Name of t at end of Actual Endorsement endorsement and guarantee provided Endorsement and
Limits of endorsement Maximum limits of by the subsidiary
endorser/guara term allocated and guarantee guarantee in the net by the parent guarantee in
Name of Company Relationship endorsement and and guarantee endorsement and guarantee to the parent
ntor Balance of value with property worth of financial company to Mainland China
guarantee of current company
guarantee as the collateral statements of the the subsidiary
term the subsidiary
most recent term
KK Enterprise KK Enterprise Stock option no more than $63,581 $63,581 $42,245 － 6.17% The total value of external Yes No No
(Malaysia) Sdn. 70% subsidiary 50% of the total (RM8,940) (RM8,940) (RM5,940) endorsements and
Bhd. limits available at guarantees of the Company
the Company for is limited at 50% of the net
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245

Holding of securities at end of term (excluding investments in subsidiaries, affiliates, and joint venture control)

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

Relationship with the security End of term
Type and name of corporate securities held Book entry
issuer Thousand Book value Holding Fair value
Grand Pacific Stock Coos Venture Capital Corp. The director of the Company Financial assets at fair value through other comprehensive 37 $1,284 2.85 $1,284
Co., Ltd. TECO Nanotech Co., Ltd. － Financial assets at fair value through other comprehensive 19 － 0.08 －
YODN Lighting Corp. － Financial assets at fair value through other comprehensive 165 1,061 0.93 1,061
Bridgestone Taiwan Co., LTD. － Financial assets at fair value through other comprehensive 1,151 86,177 1.42 86,177
China Development Financial Holding － Financial assets at fair value through other comprehensive 21,297 207,011 0.14 207,011
GPPC Chemical Stock Coos Venture Capital Corp. The director of the parent Financial assets at fair value through other comprehensive 49 1,712 3.80 1,712
Limited YODN Lighting Corp. － Financial assets at fair value through other comprehensive 64 413 0.36 413
Guozong Development Company － Financial assets at fair value through other comprehensive 200 － 1.06 －
Guozong Construction Development － Financial assets at fair value through other comprehensive 200 － 1.31 －
Bridgestone Taiwan Co., LTD. － Financial assets at fair value through other comprehensive 934 69,792 1.15 69,792
Com2B Corporation － Financial assets at fair value through other comprehensive 750 － 1.67 －
Grand Pacific Petrochemical Corporation The parent company of the Financial assets at fair value through other comprehensive 247 5,407 0.03 5,407
Grand Pacific Petrochemical Corporation The parent company of the Financial assets at fair value through other comprehensive 1,776 61,539 8.88 61,539
China Development Financial Holding The Company is the corporate Financial assets at fair value through other comprehensive 12,110 117,709 0.08 117,709
GPPC Investment Stock YODN Lighting Corp. － Financial assets at fair value through other comprehensive 631 4,052 3.54 4,052
Limited Partnership China Development Advantageous － Financial assets at fair value through other comprehensive － 62,637 － 62,637
GOLDENPACIFIC Partnership CDIB Capital Asia Partners L.P. － Financial assets at fair value through other comprehensive － 154,211 － 154,211
－－－
EQUITIES LTD. CDIB Capital Global Opportunities Financial assets at fair value through other comprehensive 139,248 139,248
Fund L.P.
GPPC Hospitality Fund KGI Victory Money Market Fund － Financial assets at fair value through other comprehensive 3,375 39,020 － 39,020
And Leisure Inc.
Videoland Inc. Stock Jeou Tai Technology Group － Financial assets at fair value through other comprehensive 2,007 $61,110 5.96 $61,110
Global Mobile Corp. － Financial assets at fair value through other comprehensive 1,440 － 0.52 －
Great Dream Pictures, Inc. － Financial assets at fair value through other comprehensive 1,000 12,283 9.98 12,283
China Life Insurance Company Limited － Financial assets at fair value through other comprehensive 94,428 2,629,821 2.35 2,629,821
China Development Financial Holding － Financial assets at fair value through other comprehensive 55,504 539,494 0.37 539,494
Partnership CDIB Capital Asia Partners L.P. － Financial assets at fair value through other comprehensive － 132,211 － 132,211
----- End of picture text -----

4. Value of the same security bought or sold accumulatively reaching NT$ 300 million or 20% and above of the paid-in capital size: None

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Company Security At start of term Bought Sold At end of term
Book entry Counter party Relationship
bought or sold Type and name Thousand value Thousand value Thousand Selling price Book cost (Losses) Thousand value
KGI Victory Financial assets at fair Open trading －－－ 39,829 $460,000 39,829 $460,094 $460,000 $94 －－
Videoland Inc. Money Market value through other market
Grand Pacific F British Virgin d Investments adopting h i i Capital － 60,898 $5,961,548 25,421 785,515 －－－－ 86,319 $7,545,825
Co., Ltd. Land & Sea 798,762
Land & Sea C Zhangzhou i l C Investments adopting initiated and －－－－ 716,901 (N ) －－－－－ 717,809
Capital Corp. Limited 908 (Note)
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246

Note: It is the adjustment in valuation using the equity method.

Value of real estate obtained reaching NT$ 300 million or 20% and above of the paid-in capital size: None.
Value of real estate dispose of reaching NT$ 300 million or 20% and above of the paid-in capital size: None.

7. Value of sales and purchases with the related parties reaching NT$ 100 million or 20% and above of the paid-in capital size: None

Purchases (Sales) Name of company	Name of counter party	Relationship		Transaction status	Transaction status		Differences in the requirements for the transaction and those for ordinarytransactions and the cause Notes and accounts receivable (payable)	Differences in the requirements for the transaction and those for ordinarytransactions and the cause Notes and accounts receivable (payable)	Differences in the requirements for the transaction and those for ordinarytransactions and the cause Notes and accounts receivable (payable)	Differences in the requirements for the transaction and those for ordinarytransactions and the cause Notes and accounts receivable (payable)
			Purchases (Sales)	Amount	Ratio to all purchases	Loan period	Unit price Loan period Balance			R a t i o t o a l l n o t e s a n d
Grand Pacific Petrochemical Corporation	GPPC Chemical Corporation	Subsidiary of the Company	Sales	$1,103,107	5.43%	Based on the Sales Contract	The contract purchase or selling price is based on the mean price in the three regions, that is, FOB Korea, CFR Taiwan, and CFR SE Asia, in the respective issues of Styrene intelligence reports for the month according to Platt’s Far East Petrochemical Scan. Settled at the end of the month and to be completely collected within 45 days after settlement. If collection cannot be fulfilled by the deadline, the one-year time deposit annual rate of the Bank of Taiwan as of January 1 of the specific year will be adopted to calculate the interest. Delinquency is limited to 3 months only. －			－
GPPC Chemical Corporation	Grand Pacific Petrochemical Corporation	The parent company of the Company	Purchase	1,103,107	86.72%	Based on the Purchase Contract	The contract purchase or selling price is based on the mean price in the three regions, that is, FOB Korea, CFR Taiwan, and CFR SE Asia, in the respective issues of Styrene intelligence reports for the month according to Platt’s Far East Petrochemical Scan.	Settled at the end of the month and to be paid off within 45 days after settlement. If it is not paid off by the deadline, the one-year time deposit annual rate of the Bank of Taiwan as of January 1 of the specific year will be adopted to calculate the interest. Delinquency is limited to 3 months only.	－	－

247

Accounts receivable form related parties reaching NT$ 100 million or 20% and above of the paid-in capital size: None.
Engagement in transaction of derivatives: None.
Related information on the name and location of the company invested in with direct or indirect major impacts, control, or joint

venture control (excluding investments in Mainland China)

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Name of Name of company Original investment value Number of shares held at end of Profits or Profits or
investing invested in Location Main scope of operation End of End of last Thousand Ratio % Book value losses of the losses from Remark:
Grand Pacific GPPC Chemical No. 66 Changxing Production and distribution $462,953 $462,953 54,200 100.00 $667,979 $45,813 $41,408 Profits or losses from investments
Co., Ltd. Limited Luzhu District, Ethylene cash dividends in the value of
$1,316, the difference between the
the consolidated basis
GPPC Investment 10F, No. 1, Sec. 4, Investment 170,307 170,307 22,032 81.60 286,809 (6,726) (5,488)
Limited Taipei City
Videoland Co., Ltd. 3F, No. 480, Production of TV programs, 1,536,404 1,536,404 71,093 62.29 4,402,183 401,764 250,259
District, Taipei Reproduction of domestic
among other trading
KK Enterprise No. 1, Ziqiang 3rd Various trademark paper, 130,026 130,026 9,918 15.73 162,049 54,723 8,608 Comprehensive holding with the
Limited Nankung Production, wholesale, and
GOLDENPACIFIC British Virgin Investment Business 10,510 10,510 75 100.00 680,316 10,806 10,806
EQUITIES LTD.
Land & Sea Capital British Virgin Investment Business 2,817,223 2,031,708 86,319 100.00 7,545,825 920,064 905,766 Profits or losses from investments
Corp. $14,298 as a result of
the difference between the
GPPC GPPC Hospitality No. 26, Lane 295, Catering 40,000 － 4,000 100.00 39,586 (414) (414)
Limited And Leisure Inc. Dunhua South
1F
Videoland Inc KK Enterprise No. 1, Ziqiang 3rd Various trademark paper, 280,862 280,862 21,307 33.79 348,100 54,723 18,492
Limited Nankung Production, wholesale, and
GPPC Investment 10F, No. 1, Sec. 4, Investment 35,372 35,372 4,968 18.40 61,255 (6,726) (1,238) Comprehensive holding with the
Limited Taipei City
Videoland Holding British Virgin Investment Business － 321 －－－ (39) (39) The investment was canceled in
Limited
KK Enterprise K.K. Chemical Hong Kong Trademark paper and tape, 5,255 5,255 125 49.90 4,415 (143) (72) With the potential to exercise
Limited Company Limited
Dragon King Inc. Samoa Reinvestment Business 3,258 3,258 100 100.00 4,759 (44) (44)
KK Enterprise Malaysia Trademark paper and tape, 15,995 15,995 1,680 70.00 50,494 12,645 8,852
(Malaysia) Sdn.Bhd.
Bhd.
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248

11. Business Relationship between Parent Company and Subsidiaries and Important Transactions

(1) January 1 through December 31, 2018 and December 31, 2018

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Status of transaction
Name of trader Counter party Relationship with the Trader Entry value Transaction requirements Ratio in consolidated overall revenue or
total assets
Grand Pacific GPPC Chemical Parent company versus Sales income $1,103,107 The contract purchase or selling price is based on 4.46%
Petrochemical Corporation subsidiary the mean price in the three regions, that is,
Corporation FOB Korea, CFR Taiwan, and CFR SE Asia, in
the respective issues of Styrene intelligence reports
for the month
according to Platt’s Far East Petrochemical Scan.
Other income 8,400 As is required by the contract 0.03%
Technical support
income 3,965 As is required by the contract 0.02%
(Listed as expense
deductible)
GPPC Investment Corp. Parent company versus Rent income 23 As is required by the Lease Contract －
subsidiary
GPPC Hospitality and Leisure Inc. Parent company versus subsidiary Rent income 23 As is required by the Lease Contract －
－
Videoland Inc. Parent company versus Rent income 137 As is required by the Lease Contract
subsidiary
KK Enterprise Parent company versus Other income 409 As is required by the Articles of Incorporation －
subsidiary
Company
GPPC Chemical Corporation Grand Pacific Petrochemical Subsidiary versus parent company Sales income 2,739 Valued according to the general transaction price 0.01%
－
Corporation Rent income 72 As is required by the Lease Contract
Other receivables 6,415 Payments for goods to be collected, 45 days 0.02%
－
Grand Pacific
Videoland Inc. Petrochemical Subsidiary versus parent Pre-paid rent 57 As is required by the Lease Contract
Corporation company Refundable deposits 50 As is required by the Lease Contract －
－
KK Enterprise Subsidiary versus Other income 409 As is required by the Articles of Incorporation
Company subsidiary
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249

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Status of transaction
Relationship with
Name of trader Counter party the Ratio in
Trader Entry Value Transaction requirements consolidated
overall revenue
KK Enterprise KK Enterprise Parent company Sales income $30,724 Valued according to the general transaction p 0.12%
Company (Malaysia) Sdn. Accounts receiva 8,578 90 days 0.03%
Endorsement and 63,581 [Based on the endorsement and ] [g][uarantee o][p][e] 0.21%
Kunshan KK Parent company Sales income 26,592 Valued according to the general transaction p 0.11%
Limited Accounts receiva 3,265 90 days 0.01%
－
Zhongshan KK Parent company Sales income 506 Valued according to the general transaction p
Limited Accounts receiva 111 90 days －
K.K. Chemical Zhongshan KK Subsidiary versu Other receivable 6,425 90 days 0.02%
Company Limited Limited
Zhongshan KK Kunshan KK Subsidiary versu Sales income 8,412 Valued according to the general transaction p 0.03%
Limited Limited Accounts receiva 449 90 days －
Kunshan KK Adhesion Zhongshan KK Subsidiary versu Sales income 6,104 Valued according to the general transaction p 0.02%
Limited Limited
Dragon King Inc. Subsidiary versu Sales income 245 Valued according to the general transaction p 0.01%
Dragon King Inc. Zhongshan KK Subsidiary versu Other receivable 3,495 90 days 0.01%
Limited
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250

(2) January 1 through December 31, 2017 and December 31, 2017

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Status of transaction
Ratio in
Name of trader Counter party Relationship with the Trader Entry Value Transaction requirements consolidated overall revenue or
total assets
Grand Pacific GPPC Chemical Parent company Sales income $915,729 The contract purchase or selling price is based on 3.92%
Petrochemical Corporation versus subsidiary the mean price in the three regions, that is,
Corporation FOB Korea, CFR Taiwan, and CFR SE Asia, in the respective issues of
Styrene intelligence reports for the month
according to Platt’s Far East Petrochemical Scan.
Accounts receivable 77,812 [Payments due are settled at the end of each month and to be completely ] 0.28%
collected within 45 days after settlement.
If it is impossible to collect payments as scheduled, it will be handled as
delinquency and interest will
be calculated by the one-year time deposit annual rate of the Bank of
Taiwan as of January 1 of the specific year. Duration of delinquency,
however, is limited to 3 months.
－
Interest income 61 As is required by the contract
Other income 8,400 As is required by the contract 0.04%
Technical support income 3,285 As is required by the contract 0.01%
(Listed as expense
deductible)
GPPC Investment Parent company versus Rent income 23 As is required by the Lease Contract －
Corp. subsidiary
－
Videoland Inc. Parent company versus Rent income 137 As is required by the Lease Contract
subsidiary
KK Enterprise Parent company versus Other income 402 As is required by the Articles of Incorporation －
subsidiary
Company
Grand Pacific
GPPC Chemical Petrochemical Subsidiary versus parent Sales income 2,803 Valued according to the general transaction price 0.01%
Corporation Corporation company
－
Rent income 72 As is required by the Lease Contract
－
Grand Pacific
Videoland Inc. Petrochemical Subsidiary versus parent Pre-paid rent 57 As is required by the Lease Contract
Corporation company
Refundable deposits 50 As is required by the Lease Contract －
KK Enterprise Subsidiary versus Other income 402 As is required by the Articles of Incorporation －
Company subsidiary
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251

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Status of transaction
Relationship with
Ratio in
Name of trader Counter party the
Trader Entry Value Transaction requirements consolidated
overall revenue
KK Enterprise KK Enterprise Parent company Sales income $36,050 Valued according to the general transaction p 0.15%
Company (Malaysia) Sdn. Accounts receiva 6,655 90 days 0.02%
Endorsement and 63,224 [Based on the endorsement and ] [g][uarantee o][p][e] 0.23%
Kunshan KK Parent company Sales income 25,960 Valued according to the general transaction p 0.11%
Limited Accounts receiva 3,077 90 days 0.01%
－
Zhongshan KK Parent company Sales income 153 Valued according to the general transaction p
－
Limited Accounts receiva 35 90 days
Other receivable 17,322 90 days 0.06%
K.K. Chemical Zhongshan KK Subsidiary versu Other receivable 6,238 90 days 0.02%
Company Limited Limited
Zhongshan KK Kunshan KK Subsidiary versu Sales income 11,703 Valued according to the general transaction p 0.05%
Limited Limited Accounts receiva 521 90 days －
Kunshan KK Adhesion Zhongshan KK Subsidiary versu Sales income 6,252 Valued according to the general transaction p 0.03%
Limited Limited Accounts receiva 17 90 days －
Dragon King Inc. Subsidiary versu Sales income 2,803 Valued according to the general transaction p 0.01%
Accounts receiva 903 90 days －
Dragon King Inc. Zhongshan KK Subsidiary versu Other receivable 3,387 90 days 0.01%
Limited
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252

(III) Information on Investment in Mainland China

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Accumulated Remitted or recovered of Profits or Company Recognition
Name of investment current term Accumulated losses of the direct or of the current End of term Investment
Investing company Main scope of Paid-in capital Investm value remitted Investment amount investment value current term indirect term investment income
company invested in in ent remitted from of the investmen Profits or already
operation size from Taiwan at Book value
Name Mainland Method Taiwan at end of company t holding losses from received as of
China start of current Remitted Recovered current term invested in ratio investments Note (4) current term
term
Note (5) Note (4) Note (5)
Grand Pacific Zhenjiang Production and USD358,850 Note (2) $1,652,206 －－ $1,652,206 $3,251,366 30.40% $988,415 $5,509,893 $473,318
Petrochemical Chimei distribution of (USD52,830) (USD52,830) (USD32,686) (USD179,388) (USD15,496)
Corporation Chemical product lines with
Company SM as the raw
Limited material and
loading/unloading
, storage,
transportation,
and operation of
their products and
various types of
chemicals and
fuel oils
Zhangzhou Production of CNY528,000 Note (2) － $716,901 － 716,901 － 30.40% － 717,809 －
Chimei primary-form (USD23,340) (USD23,340) (USD23,370)
Chemical plastic and
Company synthetic resin
Limited
KK Enterprise Zhongshan Trademark paper HKD12,300 Note (3) 39,135 － $17,626 21,509 15,570 50.00% 7,802 71,508 35,366
KK and tape, etc. (HKD10,700) (HKD4,550) (HKD6,150) Note (6)
Adhesion
Product
Corporation
Kunshan KK Trademark paper USD6,100 Note (1) 206,958 －－ 206,958 3,011 100.00% 3,016 211,357 36,061
Adhesion and tape, etc. (USD5,168) (USD5,168) Note (6)
Product (Machinery (Machinery
Corporation USD827) USD827)
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253

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Requirements of the Investment Board,
Accumulated remittance from Taiwan at end of
Investing company MOEA Investment Commission Ministry of Economic Affairs
current term
Name -approved investment value Investment limit in Mainland China
Investment value in Mainland China
(Note 7)
Grand Pacific Petrochemical $2,369,107 (USD76,170) $4,923,553(USD160,298) $15,372,584
Corporation
KK Enterprise $228,467(USD5,168、HKD6,150, and machinery $228,467(USD5,995、HKD6,150) $675,588
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Note: (1) Direct investment.

(2) Re-investment in Mainland China through a third place with approval from the government
(3) Re-investment in Mainland China through a company established in a third place with approval from the government
(4)The holding ratio in re-investments or direct or indirect investments through a company in a third place and book value of the investment at end of term
(5) Profits or losses from direct and indirect investments recognized with the equity method according to the financial statements audited and certified by other CPAs at an international accounting firm in Taiwan or CPAs in other accounting firms certified by the Company. Zhangzhou Chimei Chemical Company Limited was still during its founding stage in 2018; no major profits or losses occurred.
(6)The profits and losses from investments recognized for the current term include realized and unrealized net profits or losses from downstream, upstream, and side-stream transactions.
(7) As is required by the Investment Board, Ministry of Economic Affairs, the accumulated value or ratio of investments in Mainland China may not exceed 60% of the net worth or consolidated net worth (whichever is higher) of the company.
(8)The value of foreign currencies in this table, except for the investment value remitted out of Taiwan, which is measured at historical exchange rate, is consistently converted to New Taiwan Dollar according to the exchange rate on the balance sheet date.

254

Major transactions that have incurred directly or indirectly through a third region with the companies invested in in Mainland China:
Zhongshan KK Adhesion Product Corporation and Kunshan KK Adhesion Product Corporation are already included as entities in the consolidated financial statement due to the fact that the Group holds 50% and above of the shares combined from direct and indirect investments. Major transactions that have occurred directly or indirectly through an enterprise in a third region between the Group and Zhongshan KK Adhesion Product Corporation and Kunshan KK Adhesion Product Corporation were already completely written off at the time the consolidated financial statement was prepared. For disclosures on important transactions between the Group and the companies invested in in Mainland China, please refer to Note 13 (1)(2)-11 for details.
In addition, major transactions that occurred from January 1 through December 31, 2018 and 2017, directly or indirectly through an enterprise in a third region between the Group and Zhenjiang Chimei Chemical Company Limited are as follows:
(1) Balance of the value and percentage of purchases and corresponding payables at end of term and the percentage: None.
(2) Balance of the value and percentage of sales and corresponding payables at end of term and the percentage:
- January 1 through December 31, 2018 and December 31, 2018

Name of sale company Grand Pacific Petrochemical Corporation	Name of counter party Zhenjiang Chimei Chemical Company Limited	Sales income Accounting for sales Amount Net percentage $ 3,382 0.02%	Accounts	receivable
		Amount $ 3,382	Amount $ 735	Accounts receivable Total percentage 0.04%

 January 1 through December 31, 2017 and December 31, 2017

Name of sale company Grand Pacific Petrochemical Corporation	Name of counter party Zhenjiang Chimei Chemical Company Limited	Sales income Accounting for sales Amount Net percentage $ 3,650 0.02%	Accounts receivable	Accounts receivable
		Amount $ 3,650	Amount $ -	Accounts receivable Total percentage －

 The transaction requirements are based on the sale prices agreed upon and the payment collection term is 30 days after monthly settlement.

255

(3)Property transaction value and the incurred profits or losses: None.

(4) Balance of notes endorsement and guarantee or collaterals at end of term and the purpose: None.

(5) Maximum value, balance at end of term, interest rate bracket, and total value of interest for current term of financing: None.

(6) Other transactions with major impacts on profits or losses of the current term or financial standing: None.

XIV. Information of Operating Department

(I) The operating department is the corporate component that meets the following characteristics at the same time:
Engaged in operating activities that may generate income and incur expenses
The operating results are reviewed periodically by the operation decision makers of the corporation in order to make decisions over the assignment of resources to the said department and evaluate the performance of the department.
There is individual separate financial information available.
(II) The Group reviews the links between respective management departments and products and services from the perspective of the operation decision maker and divides the operating unit into three operating departments that should be reported:
Petrochemical business: The department is responsible for the manufacturing, processing, and trading of related products with SM as the raw material.
TV media business: The department is responsible for producing TV programs, importation, exportation, dealership, and release of cable TV programs and dealership of various types of advertisements and their planning and production.
Packing material business: The department is responsible for the manufacturing, processing, and trading of various types of packing materials such as trademark paper and releasing paper.

The other operating activities and related information of the operating departments that are not reported by the Group are combined in the disclosure under “Other Departments.”

(III) Departments that should be reported by the Group are strategic business units meant to

256

provide different products and services. Each strategic business unit requires different techniques and marketing strategies and hence need to be managed separately.

(IV) The Group’s management supervises the operating outcome of their respective sales unit in order to make decisions over distribution of resources and performance evaluation. The performance of the operating department is based on the operating profits or losses. Such amount determined is provided to the primary operation decision maker and is used to help assign resources to the department and evaluate its performance. The method consistent to that for operating profits or losses in the consolidated financial statement is adopted, too. The operating cost of the main office, income tax expenses (profits), and non-current profits and losses (non-operating income and expenditure) in the consolidated financial statement, however, are managed on the basis of the parent company and is not amortized to the departments that should be reported. The amount reported is consistent to that in the report used by the operation decision maker. Transfer pricing among operating departments is based on the normal transactions similar to those with external third parties. The accounting policy of the operating department is generally identical to the important accounting policies summarized and stated in Note 4 of the consolidated financial statement.

(V) Financial Information of Operating Department

1. January 1 through December 31, 2018 and December 31, 2018

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Business
Business Business Division of Adjustment
Item Division of Division of TV Other Division (Regulation) and Total
Petrochemistry Media Packing Write-off
Material
Income
Revenue from external
$ 20,666,575 $ 2,299,327 $ 1,775,236 $ - $ - $ 24,741,138
customers
Inter-departmental income 1,105,846 － 72,583 － ( 1,178,429) －
Total Income $ 21,772,421 $ 2,299,327 $ 1,847,819 $ - ($ 1,178,429) $ 24,741,138
Division profit and loss $ 2,303,222 $ 356,703 $ 78,235 ($ 8,772) $ 9,450 $ 2,738,838
Non-operating Income
1,318,110
and Expenditure
Income from Continuing
$ 4,056,948
Operation before Tax
Division profit and loss
includes:
Depreciation and
$ 709,661 $ 817,651 $ 69,461 $ - $ - $ 1,596,773
amortized
Division Asset $ - $ - $ - $ - $ 29,859,901 $ 29,859,901
Division Liability $ - $ - $ - $ - $ 4,238,927 $ 4,238,927
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257

2. January 1 through December 31, 2017 and December 31, 2017

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Business
Business Division Business Division of Adjustment
Item Division of TV Other Division (Regulation) and Total
of Petrochemistry Media Packing Write-off
Material
Income
Revenue from external
$ 19,176,727 $ 2,531,185 $ 1,643,053 $ - $ - $ 23,350,965
customers
Inter-departmental income 918,532 － 82,921 － ( 1,001,453) －
Total Income $ 20,095,259 $ 2,531,185 $ 1,725,974 $ - ($ 1,001,453) $ 23,350,965
Division profit and loss $ 2,139,156 $ 270,547 $ 66,599 ($ 1,842) $ 9,357 $ 2,483,817
Non-operating Income
1,699,258
and Expenditure
Income from Continuing
$ 4,183,075
Operation before Tax
Division profit and loss
includes:
Depreciation and
$ 722,526 $ 1,003,095 $ 74,834 $ - $ 27 $ 1,800,482
amortized
Division Asset $ - $ - $ - $ - $ 27,999,915 $ 27,999,915
Division Liability $ - $ - $ - $ - $ 4,515,851 $ 4,515,851
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Information on Adjustment (Regulation) and Write-off
(1) Inter-departmental income is written off upon consolidation.
(2) Departmental profits or losses adjustment (regulation) and write-off mainly deal
with the interdepartmental profits and losses, which are written off upon consolidation.
(3) Due to the fact that the value of departmental assets and liabilities measured is not an indicator to be measured by the operation decision maker, the value of assets and liabilities that should be disclosed is determined to be $0 while the value of assets and liabilities yet to be amortized, on the other hand, is listed under Adjustment (Regulation) and Write-off.
(VI) Income from Primary Products and Services

Please refer to the descriptions in Note 6 (36) for details.

(VII) Information by the Region

Income of the Group from external customers is distinguished by the location where sales or service is provided. For non-current assets, it is distinguished by the location of the asset. Information by the region is provided below:

258

Revenue from external customers

Non-current Assets

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

January 1 through January 1 to
December 31,
Area December 31, December 31, December 31, 2017
2018
2018 2017
Taiwan $ 16,670,278 $ 16,625,303 $ 8,413,853 $ 8,837,167
China 6,158,105 5,446,776 87,759 105,383
Asia 1,715,429 1,065,000 8,988 8,081
－－
Americas 106,801 109,785
African －－
83,555 98,818
region
European －－
3,212 1,660
region
Oceania －－
3,758 3,623
region
Total $ 24,741,138 $ 23,350,965 $ 8,510,600 $ 8,950,631
----- End of picture text -----

Note: non-current assets do not include assets categorized to be non-current assets available for sale, financial instruments, deferred income tax assets,

post-retirement benefit assets, and assets generated from the insurance contract.

(VIII) Primary Customer Information

The list of customers contributing to 10% and above of the net worth of consolidated operating income of the Group alone from January 1 through December 31, 2018 and 2017 is provided below:

January 1 to December 31, 2018 January 1 to December 31, 2017

Customer Company A	Amount $ 4,993,987	Net amount of Operating revenue % 20.18%	Affiliated reporting department Business Division of Petrochemistry	Customer Company A	Amount $ 5,112,621	Net amount of Operating revenue % 21.89%	Affiliated reporting department Business Division of Petrochemistry

259

V. Individual Financial Statements of the Latest Year Audited and Certified by CPAs

Grand Pacific Petrochemical Corporation CPA Audit Report

For review by Grand Pacific Petrochemical Corporation Company

Audit Opinions

We, as the CPAs, have completed the audit of the individual balance sheets dated December 31 of 2018 and 2017 and the individual comprehensive income statement, individual statement of changes in equity, individual statement of cash flows, and individual financial statement from January 1 to December 31 of 2018 and 2017, including summaries of major accounting policies of Grand Pacific Petrochemical Corporation.

As CPAs, according to the audit results from us and those from other CPAs (please refer to the paragraph about other matters), the above-mentioned individual financial statement, in all major respects, was prepared in compliance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and hence are sufficient to show the individual financial standing of Grand Pacific Petrochemical Corporation as of December 31, 2018 and 2017 and the individual financial performance and individual cash flows between January 1 and December 31, 2018 and 2017.

Bases for the Audit Opinions

We followed the Rules Governing the Audit of Financial Statements by Certified Public Accountants and generally accepted auditing rules while performing the audit. The responsibilities of the CPAs under the said standards will be explained further in the section about responsibilities in auditing the individual financial statement. Independently governed staff in the accounting firm that the CPAs belong to have followed moral regulations in honor of the profession of CPA and have remained independent of Grand Pacific Petrochemical Corporation and fulfilled other responsibilities under the said regulations. Based on the audit results from us and those from other CPAs, we believe that sufficient and adequate evidence has been obtained for the audit to serve as the basis for expressing the audit opinions.

Key Matters Being Audited

Key matters being audited refer to the most important matters based on the professional judgment of the CPAs to be included in the audit of the 2018 individual financial statement of Grand Pacific Petrochemical Corporation. Such matters were addressed throughout the audit of

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the individual financial statement and during the formation of audit opinions. The CPAs do not express separate opinions regarding these matters.

Key matters being audited of the 2018 individual financial statement of Grand Pacific Petrochemical Corporation are specified as follows:

Recognition of Income

Income is the basic operational activities for the sustainable management of an enterprise and concerns its operational performance and the management generally is faced with the pressure of fulfilling the expected financial or business performance goals. Therefore, it is pre-established that income recognition is associated with significant risk and we consider that the recognition of timing of the transfer of control over sales of products and income from sales as part of the key matters being audited.

For the accounting policy on the recognition of income, please refer to Note 4 (29) of the individual financial statement. For information on accounting items for income, please refer to the disclosure in Note 6 (36) of the individual financial statement. Major audit procedures that are already carried out by the CPAs for the above-mentioned matters are as follows:

Test the validity of sales and the internal control for the payment collection cycle in terms of its design and implementation and evaluate by random sampling if the recognition of income is adequate.
Understand the type of product and the distribution specifications with Top 10 distribution customers and evaluate the legitimacy of the distribution income and the number of days involved in the turnover of accounts receivable and analyze if there is any abnormal variation among the customers.
Select samples from distribution transactions within a certain period of time before and after the shipping deadline and verify them against related certificates in order to evaluate the accuracy of transfer timing of risks and rewards of goods produced and distributed and the control right and the timing when income is recognized.

Impairment evaluation of real estate, plants and equipment

As of December 31, 2018, the book value of real estate, plants, and equipment owned by Grand Pacific Petrochemical Corporation totaled $ 6,600,827 thousand, accounting for around 26% of the total asset value and the value is significant for the individual financial statement. In addition, the overall economic trends, market competition, and technical development can all affect the future operations of the company and accordingly affect the expected economic benefits and the recoverable amount that may be generated in the future by the cash generating units for the assets estimated and determined by the management in order to evaluate if impairment exists. Therefore, the evaluation of impairment of real estate, plants, and equipment is listed by the CPAs as part of the key matters being audited.

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For the accounting policy on the impairment of real estate, plants and equipment and non-financial assets, please refer to Note 4(18) and (20) of the individual financial statement. For information on accounting items involving real estate, plants and equipment, please refer to the disclosure in Note 6 (11) of the individual financial statement. Major audit procedures that are already carried out by the CPAs for the above-mentioned matters are as follows:

Obtain the asset impairment assessment form for respective cash generating units that have been evaluated spontaneously by the Company.
Evaluate the legitimacy of impairment signs identified by the management and the assumption and sensitivity adopted, including whether the differentiation of cash-generating units, forecast of cash flows, and discount rate are appropriate or not.
Ask the management and review audit evidence obtained from the subsequent audit procedure for verification of absence of any matter related to impairment testing after the reporting date.

Valuation of investment balance adopting the equity method

The investment balance of Grand Pacific Petrochemical Corporation as of December 31, 2017 adopting the equity method totaled $ 13,745,161 thousand, accounting for around 53% of the total asset value. The net worth of comprehensive income (including the portions of profits and losses from subsidiaries, affiliates, and joint ventures recognized using the equity method and the portions of other comprehensive income from subsidiaries, affiliates, and joint ventures recognized using the equity method) totaled $ 914,278 thousand, accounting for around 35% of the total comprehensive income. The impacted value is significant to the individual financial statement. Therefore, the CPAs include valuation of investment balance adopting the equity method as part of the key matters being audited.

For the accounting policy on investments adopting the equity method, please refer to Note 4 (17) of the individual financial statement. For information on accounting items for investments adopting the equity method, please refer to the disclosure in Note 6 (10) of the individual financial statement. Major audit procedures that are already carried out by the CPAs for the above-mentioned matters are as follows:

Evaluate the accuracy of calculation during valuation adopting the equity method and the adopted accounting policy.
Check the accuracy in the calculation of unrealized profits or losses generated from transactions with companies invested in using the equity method; they have been reasonably written off and evaluate the adopted accounting policy; the adopted accounting policy has been adjusted as needed to be consistent with the policies adopted by the Company.
Evaluate the legitimacy of impairment signs of investments adopting the equity method as identified by the management and the assumption and sensitivity adopted, including whether or not the forecast of profitability of companies invested in it in the future or the discount rate is appropriate.

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－ Other Matters Mentioning Audits by other CPAs

As is stated in Note 6 (10) of the individual financial statement, among the investments by Grand Pacific Petrochemical Corporation adopting the equity method, the financial statements of － the re-investment company adopting the equity method through KK Enterprise K.K. Chemical Company Limited and KK Enterprise (Malaysia) Sdn. Bhd. and the reinvestment company Zhenjiang Chimei Chemical Company Limited adopting the equity method through British Virgin Islands Land & Sea Capital Corp. were audited by other CPAs, not us. Therefore, among the opinions expressed by us on the above-mentioned individual financial statement, the amount listed in the above-mentioned financial statement of the Company and the above-mentioned information about the Company in Note 13 of the individual financial statement are completely based on audit reports from other CPAs. The balance of the above-mentioned investments adopting the equity method in the companies by Grand Pacific Petrochemical Corporation as of December 31, 2018 and 2017, was $5,530,087 thousand and $5,518,792 thousand, accounting for 21.35% and 22.87% of the total value, respectively. The portions of profits and losses indirectly recognized adopting the equity method from January 1 to December 31, 2018 and 2017, was $991,644 thousand and $1,549,942 thousand, accounting for 37.65% and 46.81% of the total comprehensive income, respectively.

Responsibilities of Management and Governance Unit to Individual Financial Reports

The management is responsible for preparing adequately expressed individual financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and maintaining necessary internal control relevant to the compilation of the individual financial statements in order to ensure that no significant untruthful expressions caused by frauds or errors exist in the individual financial statements.

While preparing the individual financial statement, the management is responsible for also evaluating the ability of Grand Pacific Petrochemical Corporation to continue with the operation and disclosing related matters and adopting the accounting basis for continued operation, among others. Unless the management intends to liquidate Grand Pacific Petrochemical Corporation or discontinue operation or there are no other actually feasible solutions than liquidation or discontinued operation.

The governance unit (including the Audit Committee) of Grand Pacific Petrochemical Corporation is responsible for supervising the financial reporting process.

Responsibilities of CPAs in Inspecting Individual Financial Statement

We audit the individual financial statement in order to be reasonably convinced as to whether the individual financial statement as a whole contains major untruthful expressions due to frauds or

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errors and to issue the audit report. Reasonably convinced is highly convinced. There is no guarantee, however, that existence of significant untruthful expressions in the individual financial statement will be detected according to generally accepted auditing standards. Untruthful expressions might have been caused by frauds or errors. If individual values or an overview of untruthful expressions can be reasonably expected to affect economic decisions made by users of the individual financial statement, they are considered significant.

We apply our professional judgment and keep our professional doubts while performing the audit according to generally accepted auditing standards. The CPAs also perform the following tasks:

Identify and evaluate the risk of significant untruthful expressions in the individual financial statement due to frauds or errors, design and enforce appropriate responsive policies for determined risks; and collect sufficient and adequate evidence from the audit in order to render audit opinions. Due to the fact that frauds might involve collusion, forging, intentional omission, untruthful statement, or non-compliance with internal control, the risk associated with undetected significant untruthful expressions caused by frauds is higher than that caused by errors.
Obtain a necessary understanding of internal control concerning the audit in order to design appropriate audit procedures reflective of then-current situation. The purpose, however, is not to effectively express opinions on the internal control of Grand Pacific Petrochemical Corporation.
Evaluate the adequacy of accounting policies adopted by the management and the legitimacy of accounting estimates and related disclosures made.
Reach a conclusion with regard to the adequacy of the accounting basis adopted to continue with operation by the management and whether significant uncertainties of events or conditions that might result in significant concerns about the ability of Grand Pacific Petrochemical Corporation to continue with operation exist or not according to the evidence obtained from the audit. In the event that it is determined that significant uncertainties exist with such events or conditions, on the other hand, the CPAs must remind users of the individual financial statement in their audit report that they should pay attention to related disclosures included in the statement or modify their audit opinions if such disclosures are inappropriate. Conclusions made by the CPAs are based on the evidence from the audit obtained as of the date of the audit report. Future events or conditions, however, are likely to result in Grand Pacific Petrochemical Corporation no longer capable of continuing with operation.
Evaluate the overall expression, structure, and contents of the individual financial statement (including related notes) and whether or not the individual financial statement has fairly expressed related transactions and events.
Obtain sufficient and adequate evidence from the audit regarding the financial information of entities comprising Grand Pacific Petrochemical Corporation and express opinions about the individual financial statement. The CPAs are responsible for providing guidance on, supervising,

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and implementing audits and for coming up with audit opinions for the individual financial statement.

The CPAs have also provided the governance units with the declaration on independence that independently governed staff in the accounting firm that the CPAs belong to have followed moral regulations in honor of the profession of CPA and have communicated with the governance units all relationships and other matters considered to be likely undermining the independence of CPAs (including related safeguard measures).

The CPAs, from the matters communicated with the governance units, decided key matters to be included in the 2018 individual financial statement audit of Grand Pacific Petrochemical Corporation. The CPAs specify such matters in the audit report unless it is disallowed by law to disclose to the public specific matters or under rare circumstances, the CPAs decide not to communicate specific matters in the audit report as it can be reasonably expected that negative impacts from such communication would be greater than the public interest that will be enhanced.

The engagement partners on the audit resulting in this independent auditors’ report are Ying-Jia Xiao and Shu-Chang Wang

Crowe Horwath International Approval document number: FSC Review No. 10200032833

March 21, 2019

Notice to Readers

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	Grand Pacific Petrochemical Corporation	Grand Pacific Petrochemical Corporation	Grand Pacific Petrochemical Corporation
	Individual Balance Sheet
	December 31, 2018 and	2017
				Unit: NTD 1,000
		December 31, 2018		December 31, 2017
Code	Assets	Value	`％`	Value	`％`
11xx	Current Assets	5,227,246 $	20	5,108,128 $	21
1100	Cash and Cash Equivalents (Note 6(1))	1,567,675	6	1,134,630	5
1150	Net Worth of Notes Receivable (Note 6(2))	14,419	-	15,313	-
1170	Net Worth of Accounts Receivable (Note 6(3))	1,918,484	8	2,144,159	9
1180	Accounts Receivable-Related Party (Note 6(3) and 7)	735	-	77,812	-
1200	Other Receivables (Note 6(4))	42,181	-	30,136	-
1310	Net Worth of Inventory (Note 6(5))	1,604,466	6	1,631,346	7
1410	Advance Payment (Note 6(6))	79,286	-	74,732	-
15xx	Non-current Assets	20,671,256	80	19,027,975	79
1517	Financial Assets at Fair Value through Other Comprehensive Income-	295,533	1	-	-
	(Note 6(7))
1523	Financial Assets Available for Sale-Non-current (Note 6(8))	-	-	216,169	1
1543	Financial Assets Carried at Cost-Non-current (Note 6(9))	-	-	46,884	-
1550	(Investments Accounted for Using the Equity Method (Note 6(10))	13,745,161	53	11,830,088	49
1600	Property, Plant, and Equipment (Notes 6(11) and 8)	6,600,827	26	6,909,116	29
1840	Deferred Income Tax Assets (Note 6(31))	28,659	-	24,554	-
1920	Refundable Deposits (Note 6(12))	889	-	885	-
1932	Long-term Receivables	187	-	279	-
1xxx	Total of Assets	25,898,502 $	100	24,136,103 $	100

Code	Liabilities and Equities
21xx	Current Liabilities	2,115,208 $	8	2,363,192 $	10
2130	Contract Liabilities-Current (Note 6(26))	20,881	-	-	-
2170	Accounts Payable	1,091,667	4	1,515,676	6
2200	Other Payables (Note 6(13))	482,508	2	442,990	2
2220	Other Payables-Related Party (Note 7)	6,415	-	-	-
2230	Current Income Tax Liabilities (Note 6(31))	498,854	2	350,123	1
2250	Liability Reserve-Current (Note 6(14))	12,004	-	12,071	-
2310	Advance Receipts (Note 6(15))	128	-	39,696	1
2399	Other Current Liabilities-Others (Note 6(16))	2,751	-	2,636	-
25xx	Non-current Liabilities	1,044,304	4	1,054,764	4
2550	Liability Reserve-Non-current (Note 6(17))	8,153	-	6,755	-
2570	Deferred Income Tax Liabilities (Note 6(31))	980,012	4	980,086	4
2640	Defined Benefit Liability-Non-current (Note 6(18))	29,872	-	45,198	-
2645	Guarantee Deposits (Note 6(19))	4,075	-	533	-
2670	Other Non-current Liabilities-Others (Note 6(20))	22,192	-	22,192	-
2xxx	Total of Liabilities	3,159,512	12	3,417,956	14
31xx	Equities
3100	Share Capital (Note 6(21))	9,266,203	36	9,266,203	38
3110	Common Stocks	9,066,203	35	9,066,203	37
3120	Preferred Stocks	200,000	1	200,000	1
3200	Additional Paid-in Capital (Note 6(22))	180,533	1	147,446	1
3300	Retained Earnings (Note 6(23))	12,608,192	48	10,538,796	44
3310	Legal Reserve	1,494,452	6	1,165,588	5
3320	Special Reserve	1,640,828	6	1,658,208	7
3350	Undistributed Earnings	9,472,912	36	7,715,000	32
3400	Other Equities (Note 6(24))	739,639	3	887,872	4
3410	Exchange Differences on Translation of Foreign Financial Statements	206,080) (	1) (	119,538) (	-
3420	Unrealized Income from Financial Assets at Fair Value through Other Co	m 945,719	4	-	-
3425	Unrealized Income from Financial Assets Available for Sale	-	-	1,007,410	4
3400	Treasury Stocks (Note 6(25))	55,577) (	-	122,170) (	1) (
3xxx	Total of Equities	22,738,990	88	20,718,147	86
3x2x	Total of Liabilities and Equities	25,898,502 $	100	24,136,103 $	100

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	Grand Pacific Petrochemical Corporation	Grand Pacific Petrochemical Corporation	Grand Pacific Petrochemical Corporation
	Individual Comprehensive Income Statement
	January1 through December 31,2018 and 2017
				Unit: NTD 1,000
		January 1 through December 31,2018		January 1 through December 31,2017
Code	Item	Value	`％`	Value	`％`
4000	Operating Revenue (Note 6(26))	20,305,094 $	100	18,931,639 $	100
5000	Operating Cost (Notes 6(5) and (30))	17,525,024) (	86) (	16,315,485) (	86) (
5900	Gross Operating Margin	2,780,070	14	2,616,154	14
5910	Unrealized Gain from Sale (Note 6(10))	4,744) (	-	13,318) (	-
5920	Realized Gain from Sale (Note 6(10))	13,318	-	26,926	-
5950	Net Operating Margin	2,788,644	14	2,629,762	14
6000	Operating Expenses (Note 6(30))	489,604) (	2) (	464,239) (	3) (
6100	Selling Expense	164,972) (	1) (	148,284) (	1) (
6200	Management Expense	294,335) (	1) (	282,505) (	2) (
6300	Research and Development Expense	30,297) (	-	33,450) (	-
6900	Net Operating Profit	2,299,040	12	2,165,523	11
	Non-operating Income and Expenditure
7010	Other Income (Note 6(27))	62,232	-	53,402	-
7020	Other Interest and Loss (Note 6(28))	63,145	-	60,038) (	-
7050	Financial Cost (Note 6(29))	419) (	-	447) (	-
7070	Share of Profit of Subsidiaries, Associates and Joint Ventures	1,211,359	6	1,614,886	9
	(Note 6(10))
7000	Total of Non-operating Income and Expenditure	1,336,317	6	1,607,803	9
7900	Income from Continuing Operation before Tax	3,635,357	18	3,773,326	20
7950	Income Tax Expense (Note 6(31))	675,251) (	3) (	484,684) (	3) (
8200	Net Profits of Current Term	2,960,106	15	3,288,642	17
	Other Comprehensive Income
	Items Not Re-categorized to Income
8316	Investment in Equity Instruments at Fair Value through Other	72,367) (	-	-	-
	Unrealized Valuation Income (Note 6(7))
8311	Re-measurement of Defined Benefit Plans (Note 6(18))	7,164	-	6,762) (	-
8330	Share of Other Comprehensive Income of Subsidiaries,	175,549) (	1) (	2,331	-
	-Items Not Re-categorized to Income (Note 6(10))
8349	Income Tax Associated with Items Not Re-categorized (Note	758	-	1,149	-
8310	Total of Items Not Re-categorized to Income	239,994) (	1) (	3,282) (	-
	Items Possibly Re-categorized to Income Later
8362	Unrealized Valuation Gains of Financial Assets Available for Sale	-	-	44,511	-
8380	Share of Other Comprehensive Income of Subsidiaries,	121,532) (	1) (	18,071	-
	-Items Possibly Re-categorized to Income (Note 6(10))
8399	Income Tax Associated with Possibly Re-categorized Items (Note	34,990	-	36,975) (	-
8360	Items Possibly Re-categorized to Income Later	86,542) (	1) (	25,607	-
8300	Other Comprehensive Income of Current Term (Net Worth After	326,536) (	2) (	22,325	-
8500	Total of Comprehensive Income of Current Term	2,633,570 $	13	3,310,967 $	17
	Earnings per Share of Common Stock: (NT$) (Note 6(33)
9750	Fundamental Earnings per Share	3.26 $		3.64 $
9850	Diluted Earnings per Share	3.25 $		3.63 $

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				Grand Pacific Petrochemical Corporation	Grand Pacific Petrochemical Corporation	Grand Pacific Petrochemical Corporation	Grand Pacific Petrochemical Corporation
				Individual Statement of Changes in Equity
				January1 through December 31,2018 and 2017
												Unit: NTD 1,000
		Share Capital				Retained Earnings			Other Equities
Code	Item	Common Stocks	Preferred Stocks d	itional Paid-in Ca	p Legal Reserve	Special Reserve	Undistributed Earnings	Exchange Differences on Translation of Foreign Financial	Unrealized Income from Financial Assets at Fair Value through Other	Available for Sale Financial Assets Unrealized Income	Treasury Stock	Total of Equities
A1	Balance as of January1,2017	9,066,203 $	200,000 $	123,604 $	925,519 $	1,700,322 $	5,566,215 $	27,250 $	- $	835,015 $	199,604) ($	18,244,524 $
	~~Appointment and Distribution of Earnings 2016:~~
B1	~~(Note)~~ Appropriation of Legal Reserve	-	-	-	240,069	-	240,069) (	-	-	-	-	-
B17	Turnover of Special Reserve	-	-	-	-	42,114) (	42,114	-	-	-	-	-
B5	Common Stock Cash Dividends	-	-	-	-	-	906,620) (	-	-	-	-	906,620) (
B7	Preferred Stock Cash Dividends and Stock Dividends	-	-	-	-	-	32,000) (	-	-	-	-	32,000) (
C3	~~Other Changes in Additional Paid-in Capital: As a~~	-	-	1,061	-	-	-	-	-	-	-	1,061
L7	~~result of accepting gifts~~ Disposal ofparent companyshares bysubsidiaries is co	n -	-	13,455	-	-	-	-	-	-	77,434	90,889
M1	Adjustment of Additional Paid-in Capital Due to Issuanc	-	-	9,320	-	-	-	-	-	-	-	9,320
M7	Changes in OwnershipEquityin Subsidiaries	-	-	6	-	-	-	-	-	-	-	6
D1	Net Profits from January1 to December 31,2017	-	-	-	-	-	3,288,642	-	-	-	-	3,288,642
D3	~~Other Comprehensive Income After Tax from January~~ ~~1 Db 31201~~	-	-	-	-	-	3,282) (	146,788) (	-	172,395	-	22,325
Z1	~~to ecemer 7~~ Balance as of December 31,2017	9,066,203 $	200,000 $	147,446 $	1,165,588 $	1,658,208 $	7,715,000 $	119,538) ($	- $	1,007,410 $	122,170) ($	20,718,147 $
A1	Balance as of January1,2018	9,066,203 $	200,000 $	147,446 $	1,165,588 $	1,658,208 $	7,715,000 $	119,538) ($	- $	1,007,410 $	122,170) ($	20,718,147 $
A3	~~Effect of Retrospective Application and Retrospective~~	-	-	-	-	-	42,398	-	1,191,225	1,007,410) (	-	226,213
	~~Restatement (Note 3(1))~~ ~~Appointment and Distribution of Earnings 2017:~~
B1	~~(Note)~~ Appropriation of Legal Reserve	-	-	-	328,864	-	328,864) (	-	-	-	-	-
B17	Turnover of Special Reserve	-	-	-	-	17,380) (	17,380	-	-	-	-	-
B5	Common Stock Cash Dividends	-	-	-	-	-	906,620) (	-	-	-	-	906,620) (
B7	Preferred Stock Cash Dividends and Stock Dividends	-	-	-	-	-	32,000) (	-	-	-	-	32,000) (
C3	~~Other Changes in Additional Paid-in Capital: As a~~	-	-	1,725	-	-	-	-	-	-	-	1,725
L7	~~result of accepting gifts~~ Disposal ofparent companyshares bysubsidiaries is co	n -	-	28,266	-	-	-	-	-	-	66,593	94,859
M1	Adjustment of Additional Paid-in Capital Due to Issuanc	-	-	3,089	-	-	-	-	-	-	-	3,089
M7	Changes in OwnershipEquityin Subsidiaries	-	-	7	-	-	-	-	-	-	-	7
D1	Net Profits from January1 to December 31,2018	-	-	-	-	-	2,960,106	-	-	-	-	2,960,106
D3	~~Other Comprehensive Income After Tax from January~~	-	-	-	-	-	5,512	86,542) (	245,506) (	-	-	326,536) (
Z1	~~1 to December 31 2018~~ Balance as of December 31,2018	9,066,203 $	200,000 $	180,533 $	1,494,452 $	1,640,828 $	9,472,912 $	206,080) ($	945,719 $	- $	55,577) ($	22,738,990 $

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Grand Pacific Petrochemical Corporation Notes to Individual Financial Statement

January 1 through December 31, 2018 and 2017

(Unless specified otherwise, the currency unit is NTD 1,000.)

I. Company History

(I) Manufacturing of petrochemical raw materials
(II) Manufacturing of synthetic resin and plastics
(III) Manufacturing of other chemical products
(IV) Cogeneration, thermal energy supply, and international trade
(V) Operations that are not prohibited or restricted by law besides the said approved ones The Company’s factory is located in Dashe District, Kaohsiung.

The Company’s stock started to be traded in the Taiwan Stock Exchange on December 21, 1988.

There is no ultimate parent company for the Company.

New Taiwan Dollar is the functional currency of the Company. Due to the fact that the Company is listed in Taiwan, for the sake of increased comparability and consistency, the individual financial statement herein is expressed in New Taiwan Dollar.

II. Approval date and procedure of the financial statement

This individual financial statement was approved and released by the Board of Directors on March 21, 2019.

III) Newly Released and Revised Standards and Applicable Interpretation

(I) Impacts from the newly released and revised International Financial Reporting Standards adopted by the Financial Supervisory Commission (the “FSC”):
According to the FSC Review No. 1060025773 order dated July 14, 2017 and the FSC Review No. 1060023231 order dated June 28, 2017 from the Financial Supervisory Commission, the Company shall adopt the applicable international financial reporting standards (IFRS), international accounting standards (IAS), interpretations (IFRIC), and interpretation announcements (SIC) (hereinafter referred to as the “IFRSs”)

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released by the International Accounting Standards Board (the "IASB") and approved by the Financial Supervisory Commission (the “FSC”) to be applicable in 2018 while preparing financial statements.

The following summarizes the newly released, modified, and revised guidelines and interpretations of IFRSs approved by the FSC to be applicable in 2018:

==> picture [429 x 102] intentionally omitted <==

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

The newly released/ modified/ revised guidelines and An effective date
interpretations released by the IASB
International Accounting Standard 7 Revision of "Disclosure January 1, 2017
Initiative"
The newly released/ modified/ revised guidelines and An effective date
interpretations released by the IASB
International Accounting Standard 12 Revision of “Deferred Tax January 1, 2017
----- End of picture text -----

International Accounting Standard 7 Revision of "Disclosure Initiative" The newly released/ modified/ revised guidelines and interpretations International Accounting Standard 12 Revision of “Deferred Tax	January 1, 2017 An effective date released by the IASB January 1, 2017
Assets for Unrealised Losses ”
Annual improvement for the 2014-2016 - International Financial	January 1, 2017
Reporting Standard 12 “Disclosure of Interests in Other Entities”
International Financial Reporting Standard 9 “Financial Instrument”	January 1, 2018
International Financial Reporting Standard 15 "Revenue from	January 1, 2018
Contracts with Customer”
International Financial Reporting Standard 15 Revision of	January 1, 2018
“Clarifications to IFRS 15 Revenue from ‘Contracts with
Customers’ Issues emerging from TRG discussions”
International Financial Reporting Standard 2 Revision of	January 1, 2018
“Classification and Measurement of Share-Based Payment
Transactions”
International Financial Reporting Standard 4 Revision of “Applying	January 1, 2018
IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts”
International Accounting Standard 40 Revision of "Transfers of Investment Property”	January 1, 2018
International Financial Reporting Interpretations Committee 22 “Foreign Currency Transactions and Advance Consideration”	January 1, 2018
Annual improvement for the 2014-2016 - International Financial	January 1, 2018
Reporting Standard 1 “First-time Adoption of International
Financial Reporting Standards”
Annual improvement for the 2014-2016 - International Accounting	January 1, 2018
Standard 28 “Investments In Associates And Joint Ventures”

Besides the descriptions below, it is evaluated by the Company that by applying the above-mentioned standards and interpretations it will not result in major impacts on the Company’s individual financial standing and individual financial performance:

International Financial Reporting Standard 9 "Financial Instruments"
(1) Financial asset liability instruments are determined according to the business operation model and properties of contract cash flows. They can be categorized into financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income, and financial assets measured at post-amortized cost. Financial asset equity instruments are categorized as

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financial assets at fair value through profit or loss, unless an enterprise makes an irreversible choice to recognize the fair value of equity instruments not meant for purpose of transaction under other comprehensive income.

(2) For the impairment assessment of financial asset liability instruments, the expected credit loss model shall be adopted. Whether there is significant increase in the credit risk of the said instruments is evaluated on each balance sheet date so that the 12-month expected credit loss or the expected credit loss for the duration (Interest income prior to occurrence of impairment is estimated according to the total book value of assets) applies. If impairment has occurred, on the other hand, interest income following occurrence of impairment is estimated with the book net worth after allowance for bad debts is appropriated. For accounts receivable (excluding major financial components), allowance for bad debts is recognized according to the expected credit loss for the duration.
(3) IFRS 9 “Financial Instruments” replaces IAS 39 “Financial Instruments: Recognition and Measurement” and IFRS 7 “Financial Instruments: Disclosure” among other standards are amended accordingly as well. Based on the transitional requirements of IFRS 9, the Company evaluates the operational model and categorizes financial assets according to IFRS 9 to appropriate categories based on the facts and situations that were present on January 1, 2018 (initial date of application) and adjusts them retroactively and chooses not to re-arrange the comparison period. On January 1, 2018 the type of measure and book value of financial assets in respective categories according to the decisions based on IAS 39 and IFRS 9 and their variation are summarized as follows:

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International Accounting Standard (IAS) International Financial Reporting
39 Standard (IFRS) 9
Classification of Financial
Measurement Type Book value Measurement Type Book value Description
Asset
Cash and cash equivalents Loans and accounts $ 1,134,630 Post-amortized cost $ 1,134,630 A
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Classification of Financial Asset Cash and cash equivalents	Measurement Type Loans and accounts	Book value $ 1,134,630	Measurement Type Post-amortized cost	Book value $ 1,134,630	Description A
	receivable
Notes, accounts receivable and	Loans and accounts	2,267,420	Post-amortized cost	2,267,420	A
other receivables	receivable
Stock Investment of	Financial assets	216,169	Financial Assets at	216,169	B
Tsec-Listed	available for sale		Fair Value through
			Other
			Comprehensive
			Income
Stock Investment yet to be	Financial assets	46,884	Financial Assets at	151,731	B
listed of Tsec-Listed and	carried at cost		Fair Value through
OTC-Listed			Other
			Comprehensive
			Income
Refundable deposits	Loans and accounts	885	Post-amortized cost	885	A
	receivable

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January 1, January 1,
January 1, 2018 January 1, 2018 2018 2018
Item Book value Re-categorized Re-measured Book value Effect of Effect of
(IAS 39) (IFRS 9) Retained Other
Earnings Equities
Financial assets at fair $ - $ 263,053 $ 104,847 $ 367,900 $ 16,785 $ 88,062
value through other
comprehensive
－
profits or losses
Equity Instrument
Increase: 216,169 ( 216,169) －－－
－
Re-categorized
financial assets
available for sale
(IAS 39)
Increase: 46,884 ( 46,884) －－－
－
Re-categorized
financial assets
carried at cost
(IAS 39)
Total $ 263,053 $ - $ 104,847 $ 367,900 16,785 88,062
Investments adopting $ 11,830,088 $ - $ 121,366 $ 11,951,454 25,613 95,753
the equity method
Retrospective
Application
(Description C)
Effect of Retrospective $ 42,398 $ 183,815
Application
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A. Cash and cash equivalents, notes receivable, accounts receivable (including related parties), other receivables, and refundable deposits of the Company were originally classified as loans and accounts receivable according to IAS 39. Due to the fact that the operational model involves collection of contract cash flows in nature, as is required by IFRS 9, they are classified as financial assets measured at post-amortized cost and the expected credit loss is evaluated. In addition, the Company performed impairment assessment as required by IFRS 9 on the above-mentioned assets before January 1, 2018 and no differences occurred. Therefore, the book value is not impacted.
B. The investments classified as shares available for sale according to IAS 39 of the Company totaled $216,169 thousand and the shares yet to be listed that are measured at cost totaled $46,884 thousand. Therefore, as is required by IFRS 9, equity instruments not meant for the purpose of transaction are made an irreversible choice. The Company chose to designate all of them to be measured at fair value through other comprehensive income and then re-measured at fair value. Therefore, financial assets measured at fair value through other comprehensive income as of January 1, 2018 increased by $104,847 thousand and the net adjustment of the unrealized income of financial assets at fair value

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through other comprehensive income (including those belonging to uncontrolled equities) increased by $104,847 thousand. In addition, the Company already recognized impairment loss of investments in shares measured at cost and accumulated it under retained earnings according to IAS 39. Due to the fact that such shares were designated to be measured at fair value through other comprehensive income according to IFRS 9 and impairment would no longer be evaluated, however, the net adjustment in other equities - unrealized income of financial assets at fair value through other comprehensive income on January 1, 2018 dropped by $16,785 thousand and retained earnings after the adjustment showed an increase of $16,785 thousand.

C. Due to the fact that IFRS 9 is retroactively applicable to subsidiaries using the equity method, the investments using the equity method as of January 1, 2018 were adjusted and increased by $121,366 thousand and the net unrealized profits or losses of other equities - financial assets measured at fair value through other comprehensive income and the unrealized profits or losses of financial assets available for sale were adjusted and increased by $95,753 thousand. Retained earnings were adjusted and increased by $25,613 thousand.
International Financial Reporting Standard 15 "Revenue from Contracts with Customer” and related amendments
International Financial Reporting Standard 15 "Revenue from Contracts with Customer” replaces International Accounting Standard 11 "Construction Contracts", International Accounting Standard 18 "Revenue", and related interpretations and interpretation announcements.

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(2) Identify implementation obligations as stated in the contract;

(3) Determine the transaction price;

(4) Split the transaction price to implementation obligations in the contract; and

(5) Recognize income upon fulfillment of implementation obligations.

Evaluation reveals that applying the above-mentioned standards and the results of its related amendments does not impact the Group’s individual financial standing and consolidated financial performance significantly except that more related disclosure information has to be provided. For details, please refer to Note 6 (26).

Expression of contract assets and contract liabilities

Because of the applicability of related requirements in IFRS 15, as agreed in the contract, the product or service is already transferred to the client. Rights for which considerations are collected unconditionally, however, are not available are listed under contract assets. Obligations for which considerations are already collected as agreed upon in the contract or are collectible from the customer and hence the product or service needs to be transferred to the client are listed as contract liabilities. Before they may be applicable under IFRS 15, they appear as advance payment on the Balance Sheet. The Company followed the requirements of IFRS 15 and modified accounting items appearing in the Balance Sheet on January 1, 2018. They are reclassified to contract liability from advance payment and the value was $39,568 thousand. In addition, as compared to the requirements under IAS 18, advance payment dropped by $20,881 thousand and contract liabilities

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increased by $20,881 thousand.

International Accounting Standard 7: Revision of "Disclosure Initiative"

This revision requires that enterprises should disclose variation in liabilities concerning (from) fund-raising activities, including cash non-cash changes. After evaluation, such revision will increase the variation in liabilities for the Company from disclosure related to (from) fund-raising activities. For details, please refer to Note 6 (32).

(II) Impacts of not adopting newly released and revised International Financial Reporting Standards acceptable to the FSC:

According to the FSC Review No. 1070324857 order dated July 17, 2018 and the FSC Review No. 1070324155 order dated June 13, 2018 from the Financial Supervisory Commission, the Company shall adopt the applicable IFRSs released by the International Accounting Standards Board (the "IASB") and approved by the FSC to be applicable in 2019 and the Regulations Governing Securities Issuers' Financial Statements while preparing financial statements.

The following summarizes the newly released, modified, and revised standards and

interpretations approved by the FSC to be applicable in 2019:

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The newly released/ modified/ revised guidelines and An effective date
interpretations released by the IASB
International Financial Reporting Standard 16 "Leases" January 1, 2019
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The newly released/ modified/ revised guidelines and interpretations International Financial Reporting Standard 16 "Leases"	An effective date released by the IASB January 1, 2019
International Financial Reporting Interpretations Committee 23	January 1, 2019
“Uncertainty over Income Tax Treatments”
International Financial Reporting Standard 9 Revision of	January 1, 2019
“Prepayment Features With Negative Compensation And
Modifications Of Financial Liabilities”
International Accounting Standard 28 Revision of “Long-term	January 1, 2019
Interests in Associates and Joint Ventures”
International Accounting Standard 19 Revision of “Plan	January 1, 2019
Amendment, Curtailment or Settlement”
Annual improvement of 2015-2017	January 1, 2019

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and lease liabilities (excluding leases with a term shorter than 12 months or involving low value target assets). The leaser accounting processes remain the same and are handled by the two types, operating lease and financing lease; only related disclosures are added.

The Company plans to follow the transitional requirements under IFRS 16 by choosing not to rearrange the comparative period and recognize the applicable retroactive conversion difference as part of the retained earnings on January 1, 2019.

The Company will apply the following appropriate practices in the measurement of user right assets and lease liabilities as of January 1, 2019:

For lease combinations with reasonable similar properties, a single discount rate is used to weigh lease liabilities.
Leases that are completed prior to December 31, 2019 will be treated as short-term leases.
Besides payment of the rent, incremental cost generated from the lease will not be included in the weighing of user right assets on January 1, 2019.
When weighing lease liabilities, the determination over the lease conditions (such as the lease period) will be based on expected conditions as of January 1, 2019.

The greatest impacts of adopting new standards as evaluated by the Company come from user right assets and lease liabilities recognized currently for warehouses and storage tanks rented through business leases. It is estimated that the above-mentioned difference is likely to result in an increase of $53,957 thousand for both user right assets and lease liabilities as of January 1, 2019.

In addition, no major impacts are expected with regard to the accounting processes of the Company for the leader.

(III) Impacts of International Financial Reporting Standards already released by the IASB yet to be approved by the FSC:

The Company is not adopting the following IFRSs released by the IASB yet to be approved by the FSC; the actual applicability effective date is based on the requirements of the FSC.

277

The newly released/ modified/ revised guidelines and An effective date interpretations released by the IASB International Financial Reporting Standard 3 Revision of January 1, 2020 “Definition of a Business” International Accounting Standard 1 & 8 Revision of “Definition January 1, 2020 of. Material” International Financial Reporting Standard 17 “Insurance January 1, 2021 Contracts” International Financial Reporting Standard 10 & International Waiting for the Accounting Standard 28 Revision of “Sale or contribution of decision of IASB assets between and investor and its associate or joint venture” Decision

According to preliminary evaluation, by applying the above-mentioned standards and interpretations, it will not result in major impacts on the Company’s individual financial standing and consolidated financial performance. The Company will continue to evaluate related impact values and will disclose them once evaluation is completed.

IV. Summary and Descriptions of Major Accounting Policies

Major accounting policies adopted while this individual financial statement is compiled are summarized as follows. Unless specified otherwise, such policies consistently apply to all reporting periods.

(I) Compliance Statement

This individual financial statement is prepared in accordance with the Regulations Governing Securities Issuers' Financial Statements.

(II) Compilation Basis

1.Except for the important items below, this individual financial statement is compiled according to historical cost:

(1) Financial assets and liabilities at fair value through profit or loss measured at fair value
(2) Financial assets at fair value through other comprehensive income measured at fair value/financial assets available for sale
(3) Liabilities of payment agreement on the basis of cash delivered shares measured at fair value
(4) Defined benefit liabilities recognized according to the net worth of pension fund assets with the current value of defined benefit obligations removed
Compiling financial statements meeting IFRSs requires some important accounting estimates. While the accounting policy of the Group is applied, it also relies on the

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management to apply their judgment over items that involve a high level of judgment or complexity or involve major assumptions and estimates of the consolidated financial statement. Please refer to Note 5 for the descriptions.

The Company traces back to apply IFRS 9 and IFRS 15 for the first time on January 1, 2018 and chooses not to rearrange the financial statements and notes during the 2017 comparative period and recognizes conversion difference as the retained earnings or other equities on January 1, 2018. The financial statements and notes during the 2017 comparative period are compiled according to IAS 39, IAS 18, and related interpretations and interpretation announcements.
When preparing individual financial statements, the Company adopts the equity method for subsidiaries, affiliates, or joint ventures that it has investments in. In order for the profits and losses, other combined profits and losses, and equities of the year in this individual financial statement to be identical to those in the Company’s consolidated financial statement that belong to the clients of the Company, on the individual and consolidated bases, for several accounting differences, the “investments adopting the equity method”, the “shares of profits and losses of subsidiaries, affiliates, and joint ventures recognized adopting the equity method”, “shares of profits and losses of subsidiaries, affiliates, and joint ventures recognized adopting the equity method”, and related equity items were adjusted.

(III) Conversion of foreign currencies

Items listed in the individual financial statement of the Company are weighed by the currency (that is, the functional currency) in the main economic setting where the entity operates. This individual financial statement is expressed in the Company’s functional currency, that is, the New Taiwan Dollar.
When preparing the individual financial statement, if the currency (foreign currency) used in the transaction is not the functional currency, it shall be documented in the functional currency converted according to the spot exchange rate on the day of transaction or measurement. The conversion difference generated from such transaction is recognized as the income for the current term. At the end date of the reporting period, the balance of foreign currency monetary assets and liabilities is valued and adjusted according to the spot exchange rate on the balance sheet date. The conversion difference generated as a result of adjustment is recognized as profits and losses for the current term. The balance of foreign currency non-monetary assets and liabilities is valued and adjusted according to the

279

spot exchange rate on the balance sheet date. When it is measured at fair value through profit or loss, the exchange difference generated as a result of adjustment is recognized as profits and losses for the current term. If it is measured at fair value through comprehensive income, the resultant exchange difference, on the other hand, is recognized as part of other comprehensive income. If it is not measured at fair value, the historical exchange rate on the initial transaction date will be adopted for the measurement. All profits or losses from exchange are recognized and reported as other interest and loss in the comprehensive income statement according to the nature of transaction.

The assets and liabilities of overseas operating institutions of the Company (including subsidiaries, affiliates, joint ventures, or branches in countries or using currencies different from those of the Company) were converted to New Taiwan Dollar according to the spot exchange rate on the date shown on each balance sheet date; income and expenses are converted with the mean exchange rate of the current term. All the exchange differences generated as a result of conversion are recognized as other comprehensive income.
When disposition of an overseas operating institution results in the loss of control, shared control, or major impacts of the said overseas operating institution, all the equities having to do with the said institution are to be re-classified as income. When partial disposition of a subsidiary of the overseas operating institution does not result in loss of control in the subsidiary, the accumulated exchange difference recognized under other comprehensive income is included as part of equity transactions proportionally and is calculated as such; it, however, will not be recognized as profits and losses. When partial disposition of affiliates or joint ventures of the overseas operating institution does not result in major impacts such as loss of equity or joint control over the said affiliate or joint venture, the accumulated exchange differences recognized under other comprehensive income are reclassified according to the disposition ratio as profits and losses.
(IV) Criteria for differentiating assets and liabilities between current and non-current
Assets meeting one of the following criteria are categorized as current assets:
(1) Assets that are expected to be realized or are intended to be sold or consumed within a normal business cycle;
(2 ) Those held for trading purpose
(3) Those expected to be realized within 12 months after the balance sheet date
(4) Cash or cash equivalents, excluding those meant for exchange, to pay off debts,

280

or under other restrictions in more than 12 months after the balance sheet date.

The Company classifies all the assets not meeting the above criteria as non-current assets:
Liabilities meeting one of the following criteria are categorized as current liabilities:
(1) Liabilities that are expected to be paid off within a normal business cycle
(2 ) Those held for trading purpose
(3) Liabilities that are expected to expire and be paid off within 12 months after the balance sheet date
(4) Liabilities whose payment deadline cannot be unconditionally extended to at least 12 months after the balance sheet date. Provisions for liabilities may be based on the counter party's choice. When equity instruments are issued to lead to pay-off, the categorization is not affected.
The Company classifies all the liabilities not meeting the above criteria as non-current liabilities:
(V) Cash and cash equivalents

(VI) Financial Instruments

Financial assets and financial liabilities are to be recognized when the Company becomes a party to the terms and conditions in the specific financial instrument contract.

(VII) Financial assets measured at fair value

281

2018

Financial assets at fair value through profit or loss include those mandated to be measured at fair value through profit or loss and those designated to be measured at fair value through profit or loss. Financial assets mandated to be measured at fair value through profit or loss include investments in equity instruments not designated by the Company to be measured at fair value through other comprehensive income and investments in liability instruments not qualified to be measured at post-amortized cost or at fair value through other comprehensive income.
For financial assets that are measured at post-amortized cost or at fair value through other comprehensive income, when they may be eliminated or when major decreases are measured or recognized differently, the Company designates them upon initial recognition to be financial assets at fair value through profit or loss.
For financial assets measured at fair value through profit or loss in compliance with the transaction practice of the Company, transaction date accounting is adopted.
Upon initial recognition, the Company measures them at fair value; related transaction costs are recognized as part of profits and losses and subsequently measures them at fair value, with the interest or loss recognized as part of profits and losses.
When the right to collect dividends is defined and economic benefits associated with dividends are likely to flow in and the value of such dividends can be reliably measured, the Company recognizes income from dividends as part of profits and losses.

2017

Financial assets at fair value through profit or loss include those held to be traded and those designated upon initial recognition to be measured at fair value through profit or loss. If financial assets are meant mainly to be sold within a short term at the time they are acquired, they are classified as financial assets held to be traded. For derivatives, except for those designated to be hedging items according to hedge accounting, all are classified as financial assets held to be traded. When financial assets meet one of the following criteria, the Company designates them to be measured at fair value through profit or loss upon initial recognition:
(1) Mixed (combined) contract; or
(2) May be eliminated or major decreases are measured or recognized differently; or
(3) Investments whose performance is managed and evaluated on the basis of fair value according to written risk management or investment strategies 282
For financial assets measured at fair value through profit or loss in compliance with the transaction practice of the Company, transaction date accounting is adopted.
Financial assets at fair value through profit or loss are measured at fair value upon initial recognition; related transaction costs, on the other hand, are recognized as part of profits and losses for the current term. They are measured subsequently at fair value, with the variation in fair value recognized as part of profits and losses for the current term. For publicly quoted investments in equity instruments with no active market or derivatives linked to such publicly quoted investments in equity instruments with no active market hence requiring delivery of such equity instruments upon settlement, when the fair value cannot be reliably measured, the Company lists them as “financial assets carried at cost.”

(VIII) Financial assets at fair value through other comprehensive income (applicable to 2018)

Upon initial recognition, an irreversible choice is made to list variation in fair value of investments in equity instruments not held to be traded under other comprehensive income or investments in liability instruments meeting all of the criteria below:
The financial assets are held under the operation model for the purpose of collecting contract cash flows and for sale.
(2) The cash flows generated on specific dates from terms and conditions of the contract are completely meant to pay for the principal and the interest of the principal in circulation.
For financial assets measured at fair value through other comprehensive income in compliance with the transaction practice of the Company, transaction date accounting is adopted.
Upon initial recognition, the Company measures at fair value plus transaction cost and subsequently measures at fair value:
(1) Variation in fair value of equity instruments is recognized under other comprehensive income. Upon de-recognition, the accumulated interest or loss previously recognized under other comprehensive income may not be recategorized later to profits and losses; instead, it is re-recognized under retained earnings. When the right to collect dividends is defined and economic benefits associated with dividends are likely to flow in and the value of such dividends can be reliably measured, the Company recognizes income from dividends as part of profits and losses.
(2) Variation in fair value of liability instruments is recognized under other

283

comprehensive income. Impairment loss, interest income, and profit or loss from foreign exchange prior to de-recognition are recognized as part of profits and losses. Upon de-recognition, accumulated interest or loss previously recognized under other comprehensive income will be recategorized from equities to profits and losses.

(IX) Financial assets at post-amortized cost (applicable to 2018)
The following criteria have to be fulfilled at the same time:
- (1) The financial assets are held under the operation model for the purpose of collecting contract cash flows.
- (2) The cash flows generated on specific dates from terms and conditions of the contract are completely meant to pay for the principal and the interest of the principal in circulation.
For financial assets at post-amortized cost that meet the transaction practice, the Company adopts the transaction date accounting.
Upon initial recognition, the Company measures at fair value plus transaction cost and subsequently interest income and impairment loss are recognized during the circulation period adopting the effective interest method according to the amortization procedure. Meanwhile, upon de-recognition, the interest or loss is recognized as part of profits and losses.
The Company deposits disqualified as cash equivalents held by the Group, due to the short duration involved and the insignificant impacts upon cashing, are measured at investment value.
(X) Accounts and notes receivable (applicable to 2018)

(XI) Loans and accounts receivable (applicable to 2017)

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(XII) Financial assets available for sale (applicable to 2017)
Financial available for sale are non-derivative financial assets available for sale or yet to be classified into any other category.
For financial assets available for sale in compliance with the transaction practice, the Company adopts transaction date accounting.
Upon initial recognition, the Group measures financial assets available for sale at fair value plus transaction cost and subsequently measures at fair value. The variation in fair value is recognized under other comprehensive income. For publicly quoted investments in equity instruments with no active market or derivatives linked to such publicly quoted investments in equity instruments with no active market hence requiring delivery of such equity instruments upon settlement, when the fair value cannot be reliably measured, the Company lists them as “financial assets carried at cost.”
(XIII) Impairment of financial assets

2018

On each balance sheet date, the Company considers all reasonable supporting information (including prospective information) regarding other investments in liability instruments at fair value through other comprehensive income and financial assets measured at post-amortized cost and accounts receivable consisting of major financial components or contract assets, leases receivable, loan commitment, and financial guarantee contracts and measures allowance loss according to the 12-month expected credit loss for those without an significant increase in credit risk after initial recognition. For those with a significant increase in credit risk after initial recognition, on the other hand, the allowance loss is measured according to the expected credit loss for the duration. For accounts receivable or contract assets without major financial components, the allowance loss is measured according to the expected credit loss for the duration.

2017

On each balance sheet date, the Company evaluates whether any objective evidence of impairment exists already to show that a certain financial asset or a set of financial assets experienced one or multiple events (that is loss events) after initial recognition and that the loss events have impacts that may be reliably estimated on the estimation of future cash flows of a certain financial asset or a set of financial assets.
The policy adopted by the Company in deciding whether objective evidence of

285

impairment loss exists is as follows:

(1) Major financial difficulties facing the issuer or the debtor;
(2) Default, such as delinquency in paying or failure to pay interest or the principal;
(3) Concession originally not considered given by the Company to the debtor for economic or legal causes related to the financial difficulties experienced by the debtor;
(4) Increased possibility for the debtor to declare bankruptcy or to begin other financial restructuring;
(5) Disappearance of active market for the said financial asset due to financial difficulties;
(6) Measurable decrease in the estimated cash flows in the future for a set of financial assets after initial recognition of the said assets. Despite the fact that such decrease is yet to be determined to be associated with a certain individual financial asset in the set, such data include undesirable changes in the payment status of the debtor for the set of financial assets or national or regional economic status related to breach of contract for assets in the set of financial assets;
(7) Information on major changes that have occurred in the technical, market, or regulatory settings where the issuer operates with undesirable impacts and evidence showing that it is likely impossible to recover the cost of investments in the said equities; or
(8) Significant or persistent decline in the fair value of investments in equity instruments to a level below the cost
When it is evaluated by the Company that objective evidence of impairment exists and impairment loss has occurred, it shall be handled according to each of the following categories:
(1) Loans and accounts receivable

286

reversal. The value of impairment loss recognized and reversed is reflected in the adjustment of the book value of assets in the contra account.

(2) Financial assets available for sale

(3) Financial assets carried at cost

(XIV) De-recognition of Financial Assets
When one of the following conditions is fulfilled, the Company will de-recognize financial assets:
The contract right to collect cash flows from financial assets has expired.
The contract right to collect cash flows from financial assets has been transferred and nearly all risks and rewards associated with the ownership of financial assets have been transferred.
The contract right to collect cash flows from financial assets has been transferred and control over financial assets is not retained.
(XV) Rents/Businesses Leases Receivable (Leaser)
1.According to the conditions of the lease contract, when nearly all risks and rewards associated with ownership of lease have been transferred to be borne by the lessee, it is categorized as financing lease.
(1) In the beginning of a lease, it is recognized as “rents receivable” according to

287

the net worth of investments in the lease (including the initial direct cost). The difference between the total value of rents receivable and the current value is recognized as “unearned financing income of a financing lease.”

(2) Subsequently, on a systematic and reasonable basis, financing income is amortized within the lease period in order to reflect the fixed return on the net worth of the investment in the lease held by the leaser.
(3) The lease payments relevant to the period (excluding service cost) offsets the total value of investment in the lease in order to reduce the principal and the unearned financing income.
2.With any incentive given to the leaser deducted, the business lease income is amortized and recognized as part of profits and losses for the current term with the straight line method within the lease period.
(XVI) Inventory

Inventory is measured by the cost or the net realizable value, whichever is lower. The perpetual inventory system is adopted. The cost is determined by the weighted average method. The cost of finished products and in-process products includes the cost of raw materials, direct manpower, other direct costs, and production-related manufacturing expenses (amortized according to normal throughput), excluding borrowing cost. In the comparison of whether the cost or the net realizable value is lower, the item by item method is adopted. Net realizable value refers to the balance after the estimated cost yet to be devoted till completion and related variable selling expenses are deducted from the estimated selling price during a normal business process.

(XVII)Investments Adopting the Equity Method / Subsidiary

1 . Subsidiaries are entities controlled by the Company (including structural entities). When the Company is exposed to the variable compensation from participation in an entity or is entitled to the said variable compensation and is capable of impacting the compensation through its power over the entity, the Company has control over the entity. The Company adopts the equity method when handling investments in subsidiaries. Upon acquisition, they are recognized by the cost, including the good will already identified upon acquisition, with any accumulated impairment loss estimated to occur subsequently deducted.
The portion of profits or losses for the Company after acquisition of a subsidiary is recognized as part of profits and losses for the current term and the share of other comprehensive income after acquisition is recognized as part of other comprehensive income. When the portion of losses recognized by the Company

288

in its subsidiaries is equal to or exceeds the equity held by the Company in the subsidiaries, the shareholding ratio will continue to be applied in the recognition of losses.

Unrealized profits and losses from downstream transactions between the Company and its subsidiaries are written off in the individual financial statement. Profits and losses from upstream and side-stream transactions between the Company and its subsidiaries are recognized in the individual financial statement only when they are within the scope irrelevant to the equity that the Company has in the subsidiaries. Necessary adjustments have been made to the accounting policy of the subsidiaries to be consistent with the policy adopted by the Company.
When subsidiaries experience equity changes that are not profits and losses or other comprehensive income in nature and that do not have an effect on the holding ratio in the affiliate, the Company will recognize equity changes that are part of the shares that the Company is entitled to in the subsidiary according to the holding ratio as capital reserve.
If the variance in the shares held in a subsidiary results in loss of control (and transaction of uncontrolled equities), it is handled as transaction of equities; that is, it is considered as transactions with the client. The difference between the adjusted value of uncontrolled equities and the fair value of paid or collected considerations is recognized directly as equities.
When the Company loses control over the subsidiary, the remaining investments in the said former subsidiary are re-measured at fair value and serve as the fair value of financial assets originally recognized or the cost of investments in the affiliates or joint ventures originally recognized. The difference between the fair value and the book value is recognized as the profits and losses for the current term. For all values previously recognized as part of other comprehensive income that are related to the said subsidiary, the accounting process, if with the same basis as the direct disposition of related assets or liabilities by the Company, that is, just as the interest or loss previously recognized as part of the comprehensive income, will be re-categorized as profits and losses upon disposal of related assets or liabilities. In this case, when control over the subsidiary is lost, such interest or loss is recategorized from equities to profits and losses.
As is required by the Regulations Governing Securities Issuers' Financial Statements, the portions of profits and losses and other combined profits and losses in individual financial reports and those in the financial reports prepared on a consolidated basis that belong to the parent company's clients are the same and the

289

equities of the clients in individual financial reports and those in financial reports prepared on a consolidated basis that belong to the parent company's clients are identical.

(XVIII) Real estate, plants and equipment

Real estate, plants, and equipment are booked on the basis of the acquisition cost and related interest during the construction period is capitalized.
The Company cost will only be included as part of the book value of assets or recognized as a single asset when the future economic benefits related to the item are very likely to flow into the Company and the cost of such item can be reliably measured. The book value of the restored portions shall be de-recognized. All the other maintenance costs are recognized as part of profits and losses for the current term at the time of occurrence.
The cost model is adopted during subsequent measurements of real estate, plants and equipment. Except for land for which depreciation is not recognized, depreciation is recognized with the straight line method according to the estimated durability. If respective components of real estate, plants and equipment are significant, depreciation is recognized separately.
The Company reviews the residual value, durability, and depreciation method of respective assets on the end date of each fiscal year. If the expected residual value and durability differ from previous estimates or if there are already major changes to the expected consumption pattern of future economic benefits integral of the assets, the requirements for accounting estimate changes in International Accounting Standard 8. Accounting Policies, Changes in Accounting Estimates, and Errors will be followed starting from the date when the changes occur. Durability of each asset is as follows:
(1) House and Building 4 ～ 56 years
(2) Machinery and Equipment 7 ～ 25 years
(3) Transport Equipment 2 ～ 6 years
(4) Other Equipment 3 ～ 8 years
Some depreciable assets of the Company were originally declared during taxation adopting the fixed percentage of declining method. The Company, however, changed it to the average method in 1998. This change was approved by the National Tax Administration of Southern Taiwan Province, Ministry of Finance through its (1998) STP Review (I) No. 87051967 letter with records on file.

(XIX)Lease Assets/Business Lease (Lessee)

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1.According to the conditions of the lease contract, when nearly all risks and rewards associated with ownership of lease have been transferred to be borne by the Company, it is categorized as financing lease.
(1) In the beginning of a lease, the lower of the fair value and the current payable value of minimum rent of lease assets is recognized under assets and liabilities.
(2) Subsequent minimum payable rents are assigned to the financial cost and to decrease liabilities yet to be paid. The financial cost is amortized by each term during the lease period in order to fixate the interest rate for the period calculated according to the balance of the liabilities.
(3) Real estate, plants and equipment acquired under financing lease are recognized for depreciation according to the durability of the asset. If it cannot be reasonably confirmed that the Company will acquire the ownership upon expiration of the lease period, the shorter of the durability and the lease period of the said asset is recognized for depreciation.
With any incentive given to the leaser deducted, the business lease income is amortized and recognized as part of profits and losses for the current term with the straight line method within the lease period.
(XX) Impairment of Non-financial Assets

The Company estimates the recoverable amount for assets with signs of impairment on the balance sheet date. When the recoverable amount is below the book value, on the other hand, the impairment loss is recognized. The recoverable amount refers to the result of the fair value of an asset less the disposal cost or the use value, whichever is higher. Besides good will, when impairment of assets already recognized from the previous year no longer exists or decreases, the impairment loss is reversed. The book value of assets increased due to impairment loss from reversal, however, does not exceed the book value of the asset less depreciation or amortization on the condition that impairment loss is not recognized.

(XXI) Accounts Payable

Accounts payable are the payment obligations upon acquisition of goods or service from the supplier during a normal business process. They are measured at fair value upon initial recognition and at the value subsequently adopting the effective interest method according to the post-amortized cost. They are short-term accounts payable without interest. Due to the fact that impacts from cashing are minimal, they are subsequently measured at the initial invoiced value.

(XXII) Financial liabilities at fair value through profit or loss

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2018

They are the financial liabilities available for transaction whose main purpose is to be sold or bought back within the short term, excluding derivatives that are designated to be hedging tools according to hedge accounting. Financial liabilities designed to be measured at fair value through profit or loss. When financial liabilities meet one of the following criteria, the Company designates them to be measured at fair value through profit or loss upon initial recognition: (1) Mixed (combined) contract; or
(2) May be eliminated or major decreases are measured or recognized differently; or
(3) Instruments whose performance is managed and evaluated on the basis of fair value according to written risk management policies
Upon initial recognition, the Company measures them at fair value; related transaction costs are recognized as part of profits and losses and subsequently measures them at fair value, with the interest or loss recognized as part of profits and losses.
For financial liabilities designated to be measured at the fair value through profit or loss, however, if the changes in the fair value have to do with credit risk, unless it is required to recognize them under profits and losses in order to prevent against inappropriate distribution accounting ratios or as part of a loan commitment and financial guarantee contract, they are recognized under other comprehensive income.

2017

Financial liabilities at fair value through profit or loss include those held to be traded and those designated upon initial recognition to be measured at fair value through profit or loss. They are the financial liabilities available for transaction whose main purpose is to be sold or bought back within the short term at the time of acquisition, excluding derivatives that are designated to be hedging tools according to hedge accounting. When financial liabilities meet one of the following criteria, the Company designates them to be measured at fair value through profit or loss upon initial recognition:
(1) Mixed (combined) contract; or
(2) May be eliminated or major decreases are measured or recognized differently; or
(3) Instruments whose performance is managed and evaluated on the basis of fair value according to written risk management policies
Financial liabilities at fair value through profit or loss are measured at fair value upon initial recognition; related transaction costs, on the other hand, are recognized
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as part of profits and losses for the current term. They are measured subsequently at fair value, with the variation in fair value recognized as part of profits and losses for the current term. For derivative liabilities that are not linked to equity instruments without quotation that cannot be reliably measured at fair value and must be delivered through settlement with the said equity instruments, the Company will list them as financial liabilities carried at cost.

(XXIII) Liability Reserve

The Company carries the current legal or constructive obligations for prior events and is very likely to require outflows of resources with economic benefits in order to pay off the said obligations and when the value of the said obligations can be reliably estimated, liability reserve is recognized. The measurement of liability reserve is based on the best estimated current value payable in order to pay off the obligations on the balance sheet date. The discount rate adopted is the pre-tax discount rate that reflects the time value of market to currency for the time being and evaluated specific liability risk. The discounted amortization is recognized under interest expenses. For operating losses in the future, liability reserve may not be recognized.

(XXIV)Employee Benefits

Short-term Employee Benefits

Short-term employee benefits are measured with the non-discounted value expected to be paid and will be recognized under expenses when related services are provided.

Post-retirement Benefits
(1) Defined Appropriation Plan

(2) Defined benefit plan
Net obligations under the defined benefit plan are calculated at discounted benefit value in the future earned by employees for the current term or from prior service and the current value of defined benefit obligations on the balance sheet date is adopted to subtract the fair value of planned assets. Defined net benefit obligations are calculated each year by the actuary adopting the expected unit welfare law. The discount rate, on the other hand, is determined by referring to the market dividend yield of high-quality

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corporate bonds with consistent currency and term with those of the defined benefit plan on the balance sheet date. In a country without an advanced market for such bonds, it is the market dividend yield of government bonds (on the balance sheet date) adopted.

Remeasurements generated from the defined benefit plan are recognized under other comprehensive income for the current term of occurrence and are expressed under retained earnings.
Related expenses of the service cost from the previous term are recognized
immediately as part of profits and losses.
Separation Benefits
Separation benefits are the benefits provided as a result of termination of contract with an employment prior to the normal retirement date or termination when an employee decides to accept the invitation by the Company to accept the benefits in exchange for employment. The Company recognizes expenses when it is no longer possible to cancel the offer of separation benefits or recognize related recombination costs, whichever occurs first. Welfare that is not expected to be completely paid off within 12 months after the balance sheet date shall be cashed.
Remunerations for employees and directors/supervisors
Remunerations for employees and directors/supervisors are recognized under expenses and liabilities upon presence of legal or construction obligations and when the value can be reasonably estimated. Upon differences between the actual assigned value decided later and the estimated value, it will be handled as changes in accounting estimates.

(XXV) Financial Liability and Equity Instruments

Categorization of Financial Liabilities or Equity Instruments
Liability and equity instruments issued by the Company are categorized as financial liabilities or equities according to the definitions of substantial and financial liability and equity instruments in contracts and agreements.
Equity Instrument
Equity instruments are any contract that signifies the remaining equities of an enterprise after all debts are subtracted from assets. Equity instruments issued by the Company are recognized as the value of the obtained income minus the direct cost of issuance.
Financial Liability

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Financial liabilities that are not available for transaction and are not designated to be measured at fair value through profit or loss are measured at post-amortized cost on the end date of the accounting period subsequently.

De-recognition of Financial Liabilities
Financial liabilities are only de-recognized upon dismissal, cancellation, or expiration of obligations by the Company. Upon de-recognition of financial liabilities, the difference between the book value and total value of paid considerations (including any non-cash assets transferred or liabilities undertaken) is to be recognized as part of profits and losses.
Offsetting of Financial Assets and Liabilities
Only when there are enforceable rights before the law to offset recognized financial assets and liabilities and delivery on the net worth basis or simultaneous realization of assets and payoff of liabilities are intended can financial assets and financial liabilities be offset and be expressed as net worth in the balance sheet.

(XXVI) Share Capital and Treasury Stock

Share Capital

Treasury Stock

The Company recalls released shares and recognize them as “treasury stock” according to the considerations (including direct attributable cost) paid upon buyback to be the deductible under equities. When the disposal price of the treasury stock disposed of is above the book value, the difference is listed as part of capital reserve - transaction of treasury stock. When the disposal price is below the book value, the difference, on the other hand, writes off the capital surplus from gain on disposal of assets generated from transaction of treasury stocks of the same type and in case of shortage, it is debited from retained earnings. The book value of treasury stock is based on the weighted average and is calculated separately reflective of the cause of recall.

Upon write-off of treasury stock, capital reserve - share issuance premium and 295

share capital is debited proportionally to the stock option. When the book value is above the total of the book value and the share issuance premium, the difference writes off the capital reserve generated from the transaction of treasury stocks of the same type. In case of shortage, it is debited from retained earnings. When the book value is below the total of the book value and the share issuance premium, on the other hand, the capital reserve generated from the transaction of treasury stocks of the same type is debited.

Shares held in the Company by subsidiaries shall be considered as and handled as treasury stock when the share of profits or losses is recognized adopting the equity method and upon compilation of the financial statement.

(XXVII) Share-based Payment

1.According to the share-based payment agreement with equity delivery, the obtained service from employees is measured at fair value of equity instruments given on the grant date and is recognized as compensation cost during the vesting period and equity is adjusted relatively. The fair value of equity instruments shall reflect impacts from vesting conditions and non-vesting conditions for the market price. Recognized compensation cost is adjusted as expected and will reflect the reward sizes according to the service conditions and non-market price vesting conditions until the final recognized value is recognized with the vested size on the vesting date.
2.The share-based payment agreement with cash delivery is recognized as compensation cost and liability during the vesting period at fair value of undertaken liabilities and is measured on respective balance sheet dates and settlement dates at fiar value of the granted equity instrument. Any variation is recognized as part of profits and losses for the current term.

(XXVIII) Income Tax

Income tax expenses include income tax paid for the current term and deferred income tax. Except for income tax that is relevant to items recognized as other comprehensive income or directly recognized as equity is respectively recognized as other comprehensive income or directly recognized as equity, income tax is recognized as part of profits and losses.
The Company calculates the income tax for the current term according to the tax rate already established in legislation or with substantial legislation on the balance sheet date in the country of operation or where taxable income is generated. The management periodically evaluates how income tax is declared according to applicable income tax laws and regulations and estimates the income tax liability

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according to the taxes expected to be payable to the taxation agency under applicable circumstances. Undistributed earnings are levied for income tax according to the Income Tax Act. Once distribution of earnings is approved through the shareholders' meeting in the coming year after the year when the earnings are generated, the actual distribution of earnings is considered while the income tax for undistributed earnings is recognized.

3.For the deferred income tax, the balance sheet method is adopted. The temporary difference from the book value shown in the balance sheet is recognized on the taxation basis for assets and liabilities. Deferred income tax liabilities deriving from the initially recognized good will, on the other hand, are not recognized. If the deferred income tax originates from the initial recognition of assets or liabilities in the transaction (excluding corporation consolidations) and accounting profits or taxation income (taxation loss) is not impacted at the time of transaction, on the other hand, it will not be recognized. The temporary difference associated with the invested subsidiary and affiliate, if the time point for reversal of the temporary difference can be controlled by the Company and the temporary difference is very unlikely to be reversed in a foreseeable future, will not be recognized. For the deferred income tax, legislation or substantial legislation on the balance sheet date is adopted and the tax rate (and taxation law) expected to be applicable upon realization of deferred income tax or upon pay-off of deferred income tax liabilities is to be followed.
The temporary difference of deferred income tax is very likely used to be written off within the scope of offsetting taxes in the future and the deferred income tax assets yet to be recognized or already recognized on each balance sheet date are re-evaluated.
Only when there are enforceable rights before the law to offset income tax assets against liabilities recognized for the current term and net worth-based payoff or simultaneous realization of assets and payoff of liabilities are intended can income tax assets and income tax liabilities for the current term be offset. Only when there enforceable rights before the law to offset income tax assets and income tax liabilities for the current term and the deferred income tax assets and liabilities are generated by the same taxpaying entity or different tax-paying entities with taxes to be collected by the same agency yet respectively entities intend to pay off on the net worth basis or simultaneously realize assets and pay off liabilities can the deferred income tax assets be offset against liabilities.
For tax incentives as a result of expenditure by the Company for compliance with

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regulatory incentive items, income tax credit accounting is adopted. For the later period of carryover of unused income tax credit, deferred income tax assets are recognized when it is very likely that taxes collected in the future are within the scope of unused income tax credit.

The Company lists the estimated difference of income tax from the previous year and the adjusted difference approved by the tax collection agency as the adjustments of income tax for the current year.

(XXIX)) Recognition of Income

2018

Having identified the fulfillment obligation in the contract with a customer, the Company amortizes the transaction price among respective obligations to be fulfilled under the contract and recognizes the income upon satisfaction of each fulfillment obligation.

1. Sales Income

(1) For the respective products manufactured by the Company and sold on the market, the income is recognized upon transfer of control over the product to the customer. In other words, as soon as the product is delivered to the customer, the customer has discretion over the distribution channels and pricing of the product and there are no implementation obligations yet to be fulfilled by the Company that are likely to affect the customer’s willingness to accept the product. As soon as the product is delivered to the designated location, the risk of being obsolete and lost is transferred to the customer. Only when the customer accepts the product according to the sales contract or there is objective evidence supporting that all acceptance criteria have been fulfilled does the delivery of the product occur.
(2) The Company provides standard warranty to sold products and is obligated to provide the refund upon discovery of product defects. The liability reserve is recognized upon sale.
(3) Accounts receivable are recognized upon delivery of the product to the customer and starting from the said time point, the Company owns unconditional rights over contract prices and can collect considerations from the customer upon time elapse. The advance payment collected prior to delivery of the product is recognized as contract liabilities.
(4) For processing of self-owned materials, the control over the ownership of processed products is not transferred. Therefore, the self-owned materials are

298

not recognized as income.

2. Refund Liability

Financial Components

The payment terms and conditions of the contract entered into by and between the Company and its customer are consistent to market practice. Therefore, it is determined that the contract does not contain significant financial components. In addition,for contracts with a time interval between transfer of the promised product or service and collection of considerations within a year, the transaction prices of significant financial components are not adjusted in order to reflect the time value of currency.

(4) Cost to secure contracts with customers

Although the incremental cost incurred from securing a contract with a customer for the Company is expected to be recoverable, related contract periods are shorter than a year; therefore, such cost is recognized as the operating cost or expense for the current term at the time of occurrence.

2017

1. Product Sales

(1) Product sales are recognized under income when all of the following criteria are fulfilled:
Major risks and rewards associated with the ownership of the product have
been transferred to the customer.
The Group does not continuously get involved in the management of sold
products and does not maintain effective control < 2}, either.
The value of income can be reliably measured.
Economic benefits associated with the transaction in the future are likely to

299

flow into the Company.

Costs that have occurred or will occur and are associated with transaction can
be reliably measured.

In substantial terms, income from the product sales is recognized upon delivery of the product and transfer of legitimate ownership.

(2)For processing of self-owned materials, the ownership of the processed product and significant risks are not transferred. Therefore, the self-owned materials are not treated as sales.
(3) The Company offers the quantity discount and defect return rights for sold products. The future discounts and value of returned goods are reasonably estimated according to historical experiences and other factors of concern. Liability reserve is set aside upon recognition of sales.
Labor Income, Service Income, Rent Income, Dividend Income, and Interest Income
(1) The income generated from labor provided according to the contract is recognized reflective of the extent of fulfillment of the contract. Among the labor to be provided, if a certain action item is far more important than other action items, the income shall be recognized upon completion of the said specific action item.
(2) Service income is to be recognized according to the contents of related agreements on the condition, however, that the economic benefits of the transaction are very likely to flow into the Company and the value of income can be reliably measured.
(3) Rent income is to be recognized during the lease period on the straight-line basis.
(4) Income from the dividend generated by investments is to be recognized when shareholders’ entitlement to collection is defined on the condition, however, that economic benefits related to the transaction are very likely to flow in the Company and the value of income can be reliably measured.
(5) Interest income is to be recognized according to the outstanding principal and the applicable effective interest rate on the accrual basis with the elapsed time.

(XXX) Government Subsidies

Government subsidies are recognized at fair value when it can be reasonably confirmed that the enterprise will follow the additional conditions for the government

300

subsidies and that such subsidies will be received. If the nature of government subsidies is to compensate for expenses incurred within the Company, such government subsidies are recognized as part of profits and losses for the current term on a systematic basis during the period when related expenses are incurred. Government subsidies related to real estate, plants and equipment are recognized as non-current liabilities and are recognized as part of the profits and losses for the current term with the straight line method according to the estimated durability of related assets.

V. Major Sources of Major Accounting Judgments, Estimates, and Assumed Uncertainty Results of the Company’s individual financial statement is affected by the accounting policy adopted, the accounting estimates and assumptions. Therefore, when the Company adopts the major accounting policy in Note 4, for information that is uneasy to be obtained from other sources and is likely to result in major adjustment risk of the book values of assets and liabilities in the next individual financial statement, the management must apply suitable professional judgments, estimates, and assumptions. All the estimates and related assumptions made by the Company are optimal estimates made according to the requirements of IFRSs approved and released by the FSC. The estimates and assumptions are based on historical experiences and other factors considered to be relevant. The actual results and estimates, however, may differ somehow. The Company continues to review estimates and assumptions. If modifications made to estimates only affect the current term, modifications to accounting estimates are recognized for the current term. If the estimates affect the current term and future periods at the same time, they are recognized for the current term and future periods with modifications to the estimates.
(I) Major judgments adopted in accounting policy
Except for judgments involving estimates (Refer to (II) mentioned below), the management recognizes judgments regarding amounts with significant impacts in the financial statement while adopting the accounting policy:
1. Judgment over the operational model in the classification of financial assets (applicable to 2018)
  - The Company evaluates the operational model that financial assets belong to according to the level of joint management reflected in the group of financial assets in order to accomplish specific operating purposes. Such assessment needs to take into consideration all relevant evidence, including how asset performance is measured, the risk of affecting performance, and how the compensation for related managers is decided and requires utilization of judgment. The Company constantly

301

evaluates the operational model to determine if it is appropriate and monitors financial assets measured at post-amortized cost and investments in debt instruments measured at fair value through other comprehensive income that are de-recognized before the expiration date in order to understand the cause of disposal and to evaluate if such disposal falls in line with the goal of the operational model. If it is found that the operational model has changed, the Company postpones the adjustment of categorization of financial assets obtained subsequently.

Financial assets - Impairment of investments in equities (applicable to 2017) The Company decides if impairment has occurred to respective financial assets - equity investments according to IAS 39; such decision relies on major judgment. The Company evaluates the time and amount of the fair value of respective equity investments below the cost and the financial soundness and short-term business prospects of the invested, including industrial and departmental performance, technical transformation, and operating and financing cash flows, among other factors.

When the lower-than-cost fair value of respective equity investments are significant or long-lasting, the Company recognizes impairment loss under profits and losses for the current term for “financial assets carried at cost.”

Business Lease Commitment - The Company as the Leaser
The Company has already signed the business real estate lease for certain real estate combinations. For the sake of evaluating its terms and conditions, the Company retains major risks and rewards over the ownership of the real estate and such lease is treated as business lease.
(II) Important accounting estimates and assumptions

The accounting estimates made by the Company are based on the reasonable expectations of future events according to the circumstances on a specific day. The actual results, however, might vary from the estimates. There might be estimates and assumptions over the risk of major adjustments in the book values of assets and liabilities for the coming fiscal year. Please refer to the descriptions below:

Estimated impairment of financial assets (applicable to 2018)
The estimated impairment of accounts receivable and is based on the default rate and expected loss rate assumed by the Company. The Company takes into consideration historical experiences, current market condition, and prospective information while rendering assumptions and selecting the estimated input value of impairment. For the important assumptions and input values adopted, refer to the descriptions in Note 6 (3) for details. If the actual cash flows in the future are

302

below expectations, significant impairment loss may result. As of December 31, 2018, the book value of accounts receivable of the Company totaled $1,975,819 thousand.

Estimated Impairment of Accounts Receivable (applicable to 2017) When there is objective evidence showing signs of impairment, the Company takes into consideration estimated cash flows in the future. The value of impairment loss is measured by the difference between the book value of the assets and the current value discounted at the original effective interest rate of the specific financial asset of estimated cash flows in the future (excluding the future credit loss yet to occur). If the actual cash flows in the future are below expectations, significant impairment loss may result. As of December 31, 2017, the book value of accounts receivable of the Company totaled $2,267,420 thousand.
Valuation of Inventory

Due to the fact that the inventory is valued at cost or net realizable value, whichever is lower, the Company must apply judgment and estimates to determine the new realizable value of the inventory on the balance sheet date. Due to the rapid changes in the industrial environment, the Company evaluates The Company of the inventory on the balance sheet date due to normal damage and consumption, obsolescence, or absence of market sale value and writes off the inventory cost to net realizable value. Such inventory valuation is mainly based on the product demand during a specific period in the future for estimation so major changes are likely. As of December 31, 2018 and 2017, the Company book value of inventory was $1,604,466 thousand and $ 1,631,346 thousand, respectively. ((With the allowance for inventory obsolescence and valuation losses being $13,563 thousand and $0, respectively, deducted.)

Fair value measurement and valuation procedure (applicable to 2018)
When no quotations are available on the active market for assets and liabilities measured at fair value, the Company determines whether valuation is to be outsourced or not and decides an adequate fair value evaluation technique according to applicable laws and regulations or by judgment. When it is impossible to obtain first-rate input values while the fair value is being estimated, the Company refers to the analysis of the financial standing and operational outcome of the invested, the latest transaction price, the quotation of the same equity instrument on a non-active market, the quotation of a similar instrument on an active market, and comparable company evaluation multiplier while deciding the input value. If the actual variation in the input value in the future differs from expectations, it might result in variation

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of the fair value. The Company periodically updates respective input values reflective of the market status in order to monitor if the fair value is measured adequately. For information on the fair value evaluation technique and input value, please refer to the descriptions in Note 12 (4) for details. As of December 31, 2018, the book value of corporate shares yet to be listed or traded publicly and investments held by the Company totaled $88,522 thousand.

Fair value of financial instruments (applicable to 2017)
The fair value of financial instruments with no active market or without quotations is decided with the evaluation method. Under the said circumstances, fair value is evaluated form observable data or model of similar financial instruments. If there are no observable parameters on the market, the fair value of financial instruments is evaluated through adequate assumptions. When an evaluation model is adopted to decide the fair value, all such models have to be calibrated in order to ensure that the output reflects the actual data and market price. Only observable data may be adopted for the model whenever possible. Please refer to the descriptions in Note 12 (4) for details. As of December 31, 2017, the book value of corporate shares yet to be listed or traded publicly without an active market held by the Company totaled $46,884 thousand (with the accumulated impairment value of $16,786 thousand deducted).
6.Impairment Assessment of Investments Adopting the Equity Method
When there are impairment signs showing that a certain investment adopting the equity method might have been impaired so that the book value cannot be recovered, the Company evaluates the impairment of the said investment. The Company evaluates the recoverable amount according to the discounted value of expected cash flows in the future of the invested that the Group is entitled to or the expected cash dividends to be received, and cash flows in the future generated from disposal of investments and analyzes the legitimacy of related assumptions. As of December 31, 2018 and 2017, according to the careful assessments made by the Company, there had not been major impairment loss.
Impairment assessment of tangible assets
While impairment of assets is being evaluated, the Company needs to rely on subjective judgment, the asset use model, and industrial characteristics and decides the independent cash flows of a specific asset group, the durable years of assets, and possible income and expenses to occur in the future. Any estimation change as a result of changing economic conditions or strategies can result in major impairment

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in the future. As of December 31, 2018 and 2017, the accumulated impairment value of tangible assets recognized by the Company consistently totaled $36,927 thousand

Realizability of Deferred Income Tax Assets

Deferred income tax assets are only recognized when there is likely sufficient tax income in the future for writing off the temporary difference. In the evaluation of the realizability of deferred income tax assets, major accounting judgments and estimates by the management is involved, including the expected growths and profitability rates in the future sales income, the usable income tax credit,and taxation planning, among other assumptions. Any change in the global economic environment, industrial environment, and laws and regulations can result in major adjustments of deferred income tax assets. As of December 31, 2018 and 2017, the deferred income tax assets recognized by the Company totaled $28,659 thousand and $24,554 thousand, respectively. Deferred income tax assets that are not very likely to have tax income and hence are not recognized by the Company were worth $686 thousand and $583 thousand, respectively.

Calculation of Long-term Employee Benefit Liabilities

When calculating the current value of defined benefit obligations, the Company must apply judgment and estimates in order to decide related actuary assumptions on the balance sheet date, including the discount rate and the growth rate of compensation in the future. Any variation in the actuary assumptions can significantly affect the value of defined benefit obligations of the Company. As of December 31, 2018 and 2017The Company book value of the Company’s long-term employee benefit liabilities (including net defined benefit liability and liability reserve - non-current) was $38,025 thousand and 51,953 thousand, respectively.

VI. Descriptions of Important Accounting Items

(I) Cash and cash equivalents

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Item December 31, 2018 December 31, 2017
Cash and petty cash $ 244 $ 246
Checking deposit 170 125
Demand deposit 10,464 6,041
Foreign currency deposit 14,255 29,545
Time deposit on the original
650,000 247,066
due date within three months
Bills sold under re-purchase
892,542 851,607
agreements and debts
Total $ 1,567,675 $ 1,134,630
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None of the Company’s cash and cash equivalents are provided as collateral or pledged.
The interest rate range of time deposits of the Company within three months of their original expiration date as of December 31, 2018 and 2017 was, respectively, 0.60% ～0.63% and 1.65%～1.73%, with the interest to be applied at a fixed annual interest rate.
The interest rate range of bills sold under re-purchase agreements and debts of the Company within three months of the undertaking period as of December 31, 2018 and 2017 was, respectively, 0.51%～3.10% and 0.38%～1.67%.

(II) Notes receivable

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Item December 31, 2018 December 31, 2017
Total notes receivable $ 14,419 $ 15,313
Decrease: Allowance loss/ bad －－
debt (2017)
Net amount $ 14,419 $ 15,313
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None of the Company’s notes receivable has expired; the credit loss rate is expected to be 0%.
None of the Company’s notes receivable are provided as collateral or pledged.

(III) Accounts receivable (including related parties)

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

Item December 31, 2018 December 31, 2017
Accounts receivable total $ 1,918,484 $ 2,144,159
Decrease: Allowance loss/ bad debt －－
(2017)
Subtotal 1,918,484 2,144,159
Total in Accounts Receivable -
735 77,812
Related Party
Decrease: Allowance loss/ bad debt －－
(2017)
Subtotal 735 77,812
Net amount $ 1,919,219 $ 2,221,971
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2018

1. The aging analysis and allowance loss measured according to the provision matrix

for accounts receivable (including related parties) are as follows:

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

Credit loss December 31, 2018
rate is
Allowance
Aging periods Total Net amount
expected loss
Not overdue 0% $ 1,862,491 $ - $ 1,862,491
Overdue 1 to 30 －
0% 56,728 56,728
days
Overdue 31 to 90 －－－
50%
days
Overdue 91 to 180 －－－
30%
days
Overdue 181 to －－－
50%
365 days
Overdue for more －－－
100%
than 365 days
Total $ 1,919,219 $ - $ 1,919,219
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The above are analyzed on the basis of the number of days delinquent.

For the expected credit loss rate (with abnormal items excluded, it shall be 100% recognized) within the respective aging ranges mentioned above of the Company, it is 0% when not past due or upon delinquency within 30 days, 5% to 30% upon delinquency between 31 and 180 days, 50% upon delinquency between 180 and 365 days, and 100% upon delinquency over 365 days.

For the accounts receivable yet to be past due of the Company, the expected credit loss risk is extremely low. For some of the accounts receivable already past due on the balance sheet date, on the other hand, the Company takes into consideration all reasonable supporting information such as other credit reinforcement protection and subsequent payment collection and write-off and the credit quality is evaluated to be without major changes. Meanwhile, the credit risk is not significantly increased after initial recognition. Therefore, the Company's management expects that the accounts receivable will not suffer major credit loss as a result of non-fulfillment of the contract by the counter party.

The Company adopts the simplified approach of IFRS 9 by recognizing the allowance loss for accounts receivable according to the expected credit loss for the duration. The expected credit loss for the duration is calculated with the provision matrix, taking into consideration breach-of-contract records and historical

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experiences in payment collection, the increase in delayed payments exceeding the average load period, and also the current financial standing of the customer as well as observable national or regional industrial and economic situation changes and prospects relevant to arrears of receivables prospectively for the future. As is shown by the historical experience in credit loss of the Company, there is no significant difference in the loss patterns among different customer populations. Therefore, the provision matrix does not distinguish further the customer populations; instead, the expected credit loss rate is established only by the number of delinquent days for accounts receivable and according to the actual circumstances. The Company does not hold any collateral for the said accounts receivable.

If there is any evidence showing that the counter party is faced with serious financial difficulties and the Company cannot reasonably expect the recoverable amount, the Company will recognize 100% allowance loss or write off related accounts receivable directly; nevertheless, claims will continue and the recovered amounts are recognized under profits or losses.

Information is analyzed for the variation in allowance loss recognized for accounts receivable (including related parties): None.
None of the Company’s accounts receivable are provided as collateral or pledged.

2017

The aging analysis of accounts receivable (including related parties) is as follows:

December 31, 2017

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Aging periods Total Impairment Unimpaired
Not overdue $ 2,161,818 $ - $ 2,161,818
－
Overdue 1 to 30 days 60,153 60,153
－－－
Overdue 31 to 90 days
－－－
Overdue 91 to 180 days
－－－
Overdue 181 to 365 days
－－－
Overdue for more than 365 days
Total $ 2,221,971 $ - $ 2,221,971
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The above are analyzed on the basis of the number of days delinquent.

The receivable that are yet to be past due and impaired of the Company all meet the loan criteria established according to the industrial characteristics, business scale, and profitability of the counter party. While determining the recoverability of

308

accounts receivable, the Company takes into consideration any change in the quality of credit from the original credit date to the balance sheet date. The allowance for bad debts takes reference of the aging analysis, historical experiences, and prior records of arrears and current financial standing analyzed of the counterparty in order to estimate the amount that cannot be recovered. In addition, for accounts receivable for which the allowance for bad debts is yet to be recognized by the Company on the balance sheet date, due to the quality of credit has not experienced major changes, the Company’s management believes that the amount is still recoverable and the Company does not hold any collateral for the said accounts receivable.

Information is analyzed for the variation in the allowance for bad debts recognized for accounts receivable (including related parties): None.
None of the Company’s accounts receivable are provided as collateral or pledged.

(IV) Other receivables

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Item December 31, 2018 December 31, 2017
Interest receivable $ 1,135 $ 233
Duty drawback receivable 40,904 28,886
Others 142 1,017
Total $ 42,181 $ 30,136
Item December 31, 2018 December 31, 2017
Raw material $ 381,674 $ 380,354
Material 154,865 157,538
In-process inventory 39,739 79,086
Semi-finished product 561,865 601,973
Finished good 226,716 219,927
By-product 3,475 5,442
Raw materials in transit 249,695 187,026
Subtotal 1,618,029 1,631,346
Decrease: The allowance for
－
inventory obsolescence and ( 13,563)
valuation losses
Net amount $ 1,604,466 $ 1,631,346
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(V) Inventory

309

1. The value of sales costs related to the inventory is as follows:

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January 1 through January 1 to December
Item
December 31, 2018 31, 2017
The value of sales costs
$ 17,433,362 $ 16,251,057
related to the inventory
Increase: Unshared
manpower and 84,772 70,133
manufacturing expenses
Increase: Inventory net －
13,563
realizable value loss
Increase: Inventory short －
90
(net amount)
Decrease: Inventory over －
( 121)
(net amount)
Decrease: Revenue from
( 6,552) ( 5,795)
sale of scraps
Book operating cost $ 17,525,024 $ 16,315,485
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The operating cost between January 1 and December 31, 2018 of the Company included the loss in the net realizable value of the inventory, which was $13,563 thousand, mainly because of the falling prices of raw materials and product quotations.
None of the Company’s inventory is provided as collateral or pledged.

(VI) Advance payment

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Item December 31, 2018 December 31, 2017
Advance collection of
$ 26,083 $ 11,743
payments
Pre-paid rent 752 441
Advance insurance premiums 17,051 17,031
Purchase taxes 31,055 44,123
Others 4,345 1,394
Total $ 79,286 $ 74,732
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310

－ (VII) Financial assets at fair value through other comprehensive income Non-current

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December 31,
Item December 31, 2018
2017
Domestic public corporate shares
China Development Financial
$ 239,363 (Note 1)
Holding Corporation
Domestic corporate shares yet to be
listed
Coos Venture Capital Corp. 18,412
TECO Nanotech Co., Ltd. 219
YODN Lighting Corp. 2,478
Bridgestone Taiwan Co., LTD. 42,561
Subtotal 303,033
Decrease: Adjustment in valuation ( 7,500)
Net amount $ 295,533
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The Company started to adopt IFRS 9 on January 1, 2018 and chooses not to rearrange the comparison period according to the transitional requirements in IFRS 9.
The above-mentioned investments held by the Company are not the operational model for short-term profits. The management believes that if variation in the short-term fair value of such investments is included as part of profits or losses, it is against the above-mentioned investment plan. Therefore, such investments are chosen and designated to be measured at fair value through other comprehensive income. Such investments were originally categorized as financial assets available for sale according to IAS 39 (including booked financial assets carried at cost). For the re-categorization and 2017 information, please refer to the descriptions in Notes 3(1)-1 and Notes 6(8) and (9) for details.
Net losses recognized under other comprehensive income as a result of variation in fair value between January 1 and December 31, 2018 of the Company totaled $72,367 thousand and are accumulated as part of other equities. The amount of accumulated profits or losses directly transferred to be under retained earnings as a result of disposal of investments is 0.
The Company has no financial assets at fair value through other comprehensive －

income non-current in its possession provided as collateral or pledged.

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－ (VIII) Financial assets available for sale Non-current

Item Domestic public corporate shares China Development Financial Holding Corporation Decrease: Adjustment in valuation Net amount	December 31, 2018 (Note 1)	December 31, 2017
		$ 239,363 ( 23,194) $ 216,169

The Company started to adopt IFRS 9 on January 1, 2018 and chooses not to rearrange the comparison period according to the transitional requirements in IFRS 9.
The value recognized by the Company under profits and losses for the current term between January 1 and December 31, 2017 totaled $0 and the net profits recognized under other comprehensive income totaled $44,511 thousand.
None of the financial assets available for sale - non-current held by the Company is provided as collateral or pledged.
For the shares of listed companies originally categorized to be measured at fair value through profit or loss, due to fluctuating international economic situation in the third quarter of 2008 and the confidence crisis on the global financial market results in collapsing values of financial commodities. The Company does not intend to sell the financial assets in the table below to be traded within a short period of time. Therefore, according to the requirements in Section 50 (C) of IAS 39, such financial assets on July 1, 2008 are suitably recategorized as part of financial assets available for sale, totaling $239,363 thousand. Related information is provide below:
(1) Information about the balance of the position is yet to be de-recognized for the above-mentioned recategorized assets:

Item Public corporate shares	December	31, 2017
	Book value $ 216,169	Fair value $ 216,169

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(2) Variation in fair value of re-categorized financial assets and fictional information that assumes that financial assets are not recategorized:

January 1 to December 31, 2017

Item Public corporate shares	Book value Other Comprehensive Income Recognition of Losses $ 44,511	Fictional information of measured by original category
		Current Recognition of Losses $ 44,511

(IX) Financial assets carried at cost - Non-current

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December 31,
Item December 31, 2017
2018
Domestic corporate shares yet to be
listed
Coos Venture Capital Corp. (Note 1) $ 18,412
TECO Nanotech Co., Ltd. 219
YODN Lighting Corp. 2,478
Bridgestone Taiwan Co., LTD. 42,561
Subtotal 63,670
Decrease: Accumulated impairment
( 16,786)
value
Net amount $ 46,884
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The Company started to adopt IFRS 9 on January 1, 2018 and chooses not to rearrange the comparison period according to the transitional requirements in IFRS 9.
The above-mentioned investments in the listed (traded-over-the-counter) corporate shares held by the Company are measured by the cost less impairment loss on the balance sheet date. Due to the fact that the object not traded publicly on an active market, it is impossible to obtain sufficient industrial information of similar companies and related financial information of invested objects, the range of reasonable estimates of the fair value is significant and it is impossible to reasonably evaluate chances of various estimates, the Company’s management believes that the fair value cannot be reliably measured. This is why they are categorized as financial assets carried at cost.

313

Due to the fact that some of the financial assets carried at cost continue to suffer from deficits, which is determined to be sure of impairment signs, the Company calculates the difference between related recoverable amounts with the cash generating unit and the book value of the stock option investment. The accumulated impairment value of financial assets carried at cost recognized on December 31, 2017 totaled $16,786 thousand.
None of the financial assets carried at cost held by the Company is provided as collateral or pledged.
(X)Investments Adopting the Equity Method
Investment in subsidiaries

Name of subsidiary GPPC Chemical Corporation GPPC Investment Corporation Videoland Inc. KK Enterprise GOLDENPACIFIC EQUITIES LTD. Land and Sea Capital Corp. Total	December 31,	2018 Holding % 100.00% 81.60% 62.29% 15.73% 100.00% 100.00%	December 31,	2017
	Book value $ 667,979 286,809 4,402,183 162,049 680,316 7,545,825 $ 13,745,161		Book value $ 494,931 306,185 4,226,376 161,334 679,714 5,961,548 $ 11,830,088	Holding %
				100.00% 81.60% 62.29% 15.73% 100.00% 100.00%

The total number of stock options in KK Enterprise held by the Company and its subsidiary Videoland Television Network has reached the control level and hence valuation is done using the equity method.
The portions of profits and losses and other comprehensive income of subsidiaries recognized using the equity method between January and December 31, 2018 and 2017 are recognized according to the financial statements audited by CPAs during the same period of respective subsidiaries.
The financial statements of the re-investment company adopting the equity method －

through KK Enterprise K.K. Chemical Company Limited and KK Enterprise (Malaysia) Sdn. Bhd. and the reinvestment company Zhenjiang Chimei Chemical Company Limited adopting the equity method through British Virgin Islands Land & Sea Capital Corp. were audited by other CPAs. Therefore, the amounts listed in the financial statements of and related information about the companies mentioned above as disclosed in Note 13 are completely based on audit reports from other CPAs.

314

Portions of profits and losses and other comprehensive income of subsidiaries recognized adopting the equity method are as follows:

Name of subsidiary GPPC Chemical Corporation GPPC Investment Corporation Videoland Inc. KK Enterprise GOLDENPACIFIC EQUITIES LTD. Land and Sea Capital Corp. Total	January 1 to December 31, 2018 Current Recognition of Losses Other Comprehensive Income Recognition of Losses $ 41,408 ($ 58,578) ( 5,488) ( 13,086) 250,259 ( 59,964) 8,608 ( 951) 10,806 ( 22,508) 905,766 ( 107,004) $ 1,211,359 ($ 262,091)	January 1 to December 31, 2017	January 1 to December 31, 2017
	Current Recognition of Losses $ 41,408 ( 5,488) 250,259 8,608 10,806 905,766 $ 1,211,359	Current Recognition of Losses ($ 21,174) 1,225 209,363 7,858 14,736 1,402,878 $ 1,614,886	Other Comprehensive Income Recognition of Losses
			$ 24,931 － 104,667 ( 257) ( 56,282) ( 89,632) ($ 16,573)

Note: Portions of other comprehensive income of subsidiaries recognized adopting the equity method and modifications made to the individual comprehensive income statement are as follows:

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January 1 through January 1 to
Item
December 31, 2018 December 31, 2017
Portions of other comprehensive income of
subsidiaries recognized adopting the equity method
- Items Not Re-categorized to Income ($ 175,549) $ 2,331
- Items Possibly Re-categorized to Income ( 121,532) 18,071
- Income Tax Associated with Possibly
34,990 ( 36,975)
Re-categorized Items
Total ($ 262,091) ($ 16,573)
----- End of picture text -----

The Company wired out the capital worth USD25,421 thousand (NTD785,515 thousand) in August 2018 to invest in British Virgin Islands Land & Sea Capital Corp. and the capital was reinvested in Zhangzhou Chimei Chemical Company Limited. The said investment has been submitted to and approved by the Investment Commission of MOEA through MOEA Review (II) No. 10700087220 dated 04 June 2018.
The value of investments using the equity method was adjusted down due to unrealized sales income for January 1 through December 31, 2018 and 2017, to

315

$4,744 thousand and $13,318 thousand, respectively. The value of investments using the equity method adjusted up for realized sales income, on the other hand, was $13,318 thousand, and $26,926 thousand, respectively.

From January 1 through December 31, 2018 and 2017, the value of investments using the equity method adjusted down because of the receipt of cash dividends from companies invested in by the Company using the equity method was $47,605 thousand and $76,221 thousand, respectively.
From January 1 through December 31, 2018 and 2017, the value of investments using the equity method adjusted up because of the variation in ownership equities held by the Company in its subsidiaries was $7 thousand and $6 thousand, respectively.
From January 1 through December 31, 2018 and 2017, the value of investments using the equity method adjusted up because of the release of dividends by the Company to its subsidiaries and the disposal of parent company shares by subsidiaries that is considered a treasury stock transaction was $97,948 thousand and $100,209 thousand, respectively. Please refer to Note 6 (25) for details.
None of the Company’s Investments using the equity method is provided as collateral or pledged.
With regards to the information on subsidiaries of the Company, please refer to Note 4 (3) of the Company’s 2017 consolidated financial statement.
For the information on companies re-invested in through British Virgin Islands Land & Sea Capital Corp. and KK Enterprise in Mainland China by the Company, please refer to the Mainland China investment information disclosed in Note 13 (3).

(XI) Real estate, plants and equipment

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

Item December 31, 2018 December 31, 2017
Land $ 3,185,217 $ 3,185,217
House and Building 1,238,472 1,226,526
Machinery and Equipment 11,428,955 11,288,043
Transport Equipment 35,462 34,431
Other Equipment 1,112,491 1,056,317
Unfinished engineering and
47,259 76,740
equipment to be inspected
Cost total 17,047,856 16,867,274
Decrease: Accumulated
( 10,410,102) ( 9,921,231)
depreciation value
Decrease: Accumulated
( 36,927) ( 36,927)
impairment value
Net amount $ 6,600,827 $ 6,909,116
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316

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Unfinished
House and Machinery and Transport Other engineering
Item Land Total
Building Equipment Equipment Equipment and equipment
to be inspected
Cost:
January 1, 2018
$3,185,217 $1,226,526 $11,288,043 $ 34,431 $1,056,317 $ 76,740 $16,867,274
Balance
Addition － 10,447 136,508 1,309 244,070 46,743 439,077
Disposition －－ ( 56,973) ( 278) ( 155,213) － ( 212,464)
Re-categorized － 1,499 61,377 － ( 32,683) ( 76,224) ( 46,031)
(note)
December 31,
$3,185,217 $1,238,472 $11,428,955 $ 35,462 $1,112,491 $ 47,259 $17,047,856
2018 Balance
Accumulated
depreciation and
impairment value:
January 1, 2018
$ - $ 645,266 $ 8,599,888 $ 24,870 $ 688,134 $ - $ 9,958,158
Balance
Depreciation Cost － 34,731 545,355 2,093 118,976 － 701,155
Disposition －－ ( 56,793) ( 278) ( 155,213) － ( 212,284)
Impairment Loss (Reserved) －－－－－－－
December 31,
$ - $ 679,997 $ 9,088,450 $ 26,685 $ 651,897 $ - $10,447,029
2018 Balance
Unfinished
House and Machinery and Transport Other engineering
Item Land Total
Building Equipment Equipment Equipment and equipment
to be inspected
Cost:
January 1, 2017
$3,185,217 $1,204,698 $11,250,144 $ 27,915 $1,038,249 $ 127,175 $16,833,398
Balance
Addition － 27,011 122,563 6,915 98,207 76,705 331,401
Disposition － ( 18,377) ( 192,666) ( 1,500) ( 63,256) － ( 275,799)
Re-categorized － 13,194 108,002 1,101 ( 16,883) ( 127,140) ( 21,726)
(note)
December 31,
$3,185,217 $1,226,526 $11,288,043 $ 34,431 $1,056,317 $ 76,740 $16,867,274
2017 Balance
Accumulated
depreciation and
impairment value:
January 1, 2017
$ - $ 623,030 $ 8,262,880 $ 24,513 $ 605,046 $ - $ 9,515,469
Balance
Depreciation Cost － 36,528 529,312 1,857 146,344 － 714,041
Disposition － ( 14,292) ( 192,304) ( 1,500) ( 63,256) － ( 271,352)
Impairment Loss (Reserved) －－－－－－－
December 31,
$ - $ 645,266 $ 8,599,888 $ 24,870 $ 688,134 $ - $ 9,958,158
2017 Balance
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Note: The net decrease from re-categorization is the transfer of real estate, plants and equipment under expenses.

The adjustment in the real estate, plants and equipment obtained from the statement of cash flows is as follows:

317

Item Increase in real estate, plants and equipment Increase: Decrease in Equipment Accounts Receivable Paid Cash	January 1 through December 31, 2018 $ 439,077 1,492 $ 440,569	January 1 to December 31, 2017
		$ 331,401 27,373 $ 358,774

Capitalized amount and interest rate range of the cost of loans for real estate, plants and equipment: None.
Major components of the Company’s real estate, plants and equipment have depreciation calculated by the following durability on the straight line basis:
(1) House and Building

～ Main part of house and premise 26 56 years ～ Auxiliary equipment of house 11 21 years ～ Air-conditioning equipment 5 8 years ～ Fire prevention equipment 4 6 years ～ Greening of roads 4 11 years (2) Machinery and Equipment ～ Chemical equipment 8 25 years Cogeneration equipment 16 years Gas supply equipment 10 years Others 7 years ～ (3) Transport equipment 2 6 years (4) Other Equipment ～ Furniture and office equipment 4 7 years Others 3～8 years

Due to the fact that the actual wear of some equipment is greater than expected depreciation, the Company expects that cash in-flows in the future of such equipment will be reduced to result in the recoverable amount less than the book value. As of December 31, 2018 and 2017, the accumulated impairment value of real estate, plants and equipment recognized, after careful evaluation by the Company, was both $36,927 thousand.
For information on real estate, plants and equipment provided as collateral, please refer to the descriptions in Note 8 for details.

318

(XII) Refundable deposits

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

Item December 31, 2018 December 31, 2017
Contract bond - tender bond $ 360 $ 360
Premium For Lease - Lessee 494 388
Others 35 137
Total $ 889 $ 885
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(XXIII) Other payables

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Item December 31, 2018 December 31, 2017
Salary payable and award $ 287,459 $ 261,962
Remunerations for employees
37,478 38,900
payable
Remunerations for
74,956 77,801
directors/supervisors payable
Freight payable 15,425 12,235
Accrued taxes payable 1,779 1,821
Insurance premiums payable 3,529 4,460
Utilities expense payable 2,940 3,158
Cost of renovation payable 20,744 14,220
Service charge payable 18,433 15,544
Labor cost payable 1,810 1,750
Equipment payable 4,543 6,035
Others 13,412 5,104
Total $ 482,508 $ 442,990
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`－` (XIV) Liability Reserve Current

Item Employee Benefits - Vacation payment	December 31, 2018 $ 12,004	December 31, 2017 $ 12,071

－
1. Employee benefits liability reserve current is estimated and recognized for the vested rights of employees to service and leave. Under most circumstances, sick leave and maternity or paternity leave is contingent in nature and is dependent on events to occur in the future instead of accumulating. Therefore, such cost is recognized upon occurrence of leave.
－
1. Variable information of employee benefits liability reserve current is as follows:

319

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

January 1 to December January 1 to December
Item
31, 2018 31, 2017
Balance at beginning of
$ 12,071 $ 13,229
term
Addition amount of the
18,812 18,208
current term
Access amount of the
( 17,864) ( 17,225)
current term
Reserve amount of the
( 1,015) ( 2,141)
current term
Balance at end of term $ 12,004 $ 12,071
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(XV) Pre-collected Payments

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Item December 31, 2018 December 31, 2017
Advance collection of
$ - $ 39,568
pre-collected
Pre-collected rent 128 128
Total $ 128 $ 39,696
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Note: The Company started to apply applicable requirements of IFRS 15 on January 1,

Obligations that require transfer of products or services to the customer upon collection of or permission to collect considerations as agreed upon in the contract are recognized as contract liabilities. Please refer to Note 6 (26) for details.

`－` (XVI) Other Current Liabilities Others

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Item December 31, 2018 December 31, 2017
All Collections $ 2,751 $ 2,636
－
Non-current
Item December 31, 2018 December 31, 2017
Plans of Other Long-term Employee
$ 8,153 $ 6,755
Benefit Liabilities
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－ (XVII) Liability Reserve Non-current

Other long-term employee benefit plans of the Company refer to the long-term service award and consolation money for employees. Payment criteria for the long-term service award and the consolation money are based on the base points obtained according to the number of years in service.
Components of other long-term employee benefits obligations and liabilities already recognized by the Company are as follows:

320

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Item December 31, 2018 December 31, 2017
Current Value of Defined Benefit
Obligations of Other Long-term $ 8,153 $ 6,755
Employee Benefit Liabilities
－－
Fair value of planned assets
Net variation in other long-term
employee benefits obligations and $ 8,153 $ 6,755
liabilities
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Net variation in other long-term employee benefits obligations and liabilities is as

follows:

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

January 1 through January 1 to
Item
December 31, 2018 December 31, 2017
Balance at beginning of term $ 6,755 $ 3,479
Cost of Other Long-term Employee
Benefit Liabilities:
Current and prior period service cost 735 2,689
Interest Expense 74 37
Re-measured:
Actuarial gains and losses -
－
population statistics assumption 77
change
Actuarial gains and losses - financial －
69
assumption change
Actuarial gains and losses -
786 885
experience adjustments
Recognized as part of profits and
1,741 3,611
losses
Paid benefits ( 343) ( 335)
Balance at end of term $ 8,153 $ 6,755
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The amount of benefit costs recognized under profits and losses of other long-term employee benefits plans mentioned above is consistently listed under management cost as a single entry by the type of function.
Composition of Planned Assets:

The Company is not configured with related assets and payment only occurs when it actually happens.

The value of other long-term employee benefits obligations of the Company is precisely calculated by a qualified actuary. Primary assumptions on the date of measure for the actuary valuation are as follows:

321

Item Discount rate Future salary increase rate	2018 0.875%～1.000% 1.75%～2.00%	2017
		0.875%～1.125% 1.75%～2.00%

The assumptions of the death rate in the future are estimated according to the Fifth Experience Mortality Table of the Insurance Industry in the region of Taiwan.

The analysis of the current value of other long-term employee benefits obligations affected as a result of the variation in the primary actuary assumptions adopted is as follows:
(1)Interest Rate Risk
A reduced interest rate of government bonds will result in increased current values of other long-term employee benefits obligations; the return on liability investment in planned assets, however, increases, too. Both exercise partial write-off effects on other long-term employee benefits liabilities.
(2) Salary Risk
Calculations of the current values of other long-term employee benefits obligations refer to the compensation in the future for members enrolled in the plan. Therefore, the increase in the compensation of members enrolled in the plan will result in the increase in the current value of other long-term employee benefits obligations.
If major reasonable possible changes occur, respectively, to actuary assumptions, with other assumptions remaining unchanged, the amount increased (decreased) in the current value of other long-term employee benefits obligations is as follows:

Discount rate Increase by 0.25% Decrease by 0.25% ($ 140) $ 143 ($ 109) $ 113	Future salary	increase rate
Increase by 0.25% ($ 140) ($ 109)	Increase by 0.25% $ 63 $ 35	Decrease by 0.25%
		($ 61)
		($ 34)

322

in the current value of other long-term employee benefits obligations. In addition, in the above-mentioned sensitivity analysis, the current value of other long-term employees benefits obligations on the end date of the reporting period is precisely calculated adopting the projected unit credit method; it is measured on the same basis as that for the defined benefit liability on the balance sheet. The method adopted for the sensitivity analysis of the current term is the same as the assumption and that adopted in the previous term.

The appropriation and payment for the above-mentioned other long-term employee benefits plan in 2019 of the Company are $0 and $608 thousand, respectively.

(XVIII) Post-retirement Benefit Plan

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

Item December 31, 2018 December 31, 2017
Defined Benefit Plan $ 28,465 $ 43,855
Defined Appropriation Plan 1,407 1,343
Total $ 29,872 $ 45,198
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1. Defined Benefit Plan

(1) The Company has defined benefits for retirement in place as required by the Labor Standards Act which are applicable to the duration of service of all official employees under the Labor Pension Statutes enforced on July 1, 2005 and subsequent duration of service of employees that chose to continue to apply the Labor Standards Act following the enforcement of the Labor Pension Statutes. For employees who meet the retirement criteria, payment of the pension fund is calculated by the duration of service and the mean salary for the 6 months prior to retirement. If the duration of service is within 15 years, inclusive, the employee is entitled two base points per year. If the duration of service exceeds 15 years, the employee is entitled to a base point upon each anniversary. The maximum number of base points, however, is limited at 45. The Company sets aside the pension fund at a certain ratio (currently 3%) to the total monthly salary and save it in the Retirement Reserve account with the Bank of Taiwan under the name of Employee Retirement Reserve Supervisory Committee. In addition, to meet the needs of high-ranking managers, the Company set up the Manager Retirement Fund Management Committee in September 2004 and sets aside the pension fund for managers at a certain ratio (currently 30%) to the total salary paid to managers each month and saves it in the exclusive account with a financial institution under the name of Managerial Retirement Reserve of the Company. The Company

323

calculates the balance in the above-mentioned Retirement Reserve account for the employees before the end of each year. If the balance is insufficient to pay the amount of pension fund calculated as mentioned above for employees expected to meet the retirement criteria within the coming year, the Company will set aside the difference in a lump sum by the end of March in the coming year.

(2) The amount recognized on the Balance Sheet of the defined benefit plan is as follows:

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

Item December 31, 2018 December 31, 2017
Current value of defined benefit
$ 650,725 $ 651,641
obligations
Fair value of planned assets ( 622,260) ( 607,786)
Net Defined Benefit Liability $ 28,465 $ 43,855
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(3) The variation in the current value of defined benefit obligations is as follows:

Item Value of defined benefit obligations at the beginning of term Current service cost Interest Expense Re-measured: Actuarial gains and losses - population statistics assumption change Actuarial gains and losses - financial assumption change Actuarial gains and losses - experience adjustments Paid benefits Value of defined benefit obligations at the end of term	January 1 through December 31, 2018 $ 651,641 10,277 7,125 － 6,666 3,484 ( 28,468) $ 650,725	January 1 to December 31, 2017
		$ 672,293 11,372 7,352 －－ 5,609 ( 44,985) $ 651,641

(4) Variation in the fair value of planned assets is as follows:

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

January 1 through January 1 to
Item
December 31, 2018 December 31, 2017
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Item	January 1 through December 31, 2018	January 1 to December 31, 2017
Fair value of planned assets at the beginning of term	$ 607,786	$ 617,762
Interest income	6,823	6,931
Re-measured:
Net Interest rewards of planned assets	17,314	( 1,153)
Employer appropriation	18,805	29,231

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Paid benefits of planned assets Fair value of planned assets at the end term	( 28,468) $ 622,260	( 44,985) $ 607,786

(5) The amount of the defined benefit costs in the defined benefit plan recognized on the comprehensive income statement is as follows:

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January 1 through January 1 to
Item
December 31, 2018 December 31, 2017
Current service cost $ 10,277 $ 11,372
Interest expense of defined benefit
7,125 7,352
obligations
Interest income of planned assets ( 6,823) ( 6,931)
Recognized as part of profits and
$ 10,579 $ 11,793
losses
Re-measured:
Actuarial gains and losses -
population statistics assumption $ - $ -
change
Actuarial gains and losses - －
6,666
financial assumption change
Actuarial gains and losses -
3,484 5,609
experience adjustments
Net Interest rewards of planned
( 17,314) 1,153
assets
Other Comprehensive Income
($ 7,164) $ 6,762
Recognition of Losses
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The amount of net defined benefit costs recognized under profits and losses of the above-mentioned benefit plan is as follows as a single entry by the type of function:

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January 1 to January 1 to
Item
December 31, 2018 December 31, 2017
Operating cost $ 6,254 $ 8,014
Operating expenses
Selling Expense 385 523
Management Expense 3,641 2,887
Research and Development
299 369
Expense
Subtotal 4,325 3,779
Total $ 10,579 $ 11,793
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(7) For the fund assets for the defined benefit retirement plan of the Company, operation is outsourced to the Bank of Taiwan according to the items in Article 6 of the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund ( that is, to be saved in domestic and international financial institutions, to be invested in domestic and international listed, traded-over-the-counter, or private placement equity securities, and to be invested in domestic an international real estate security-based instruments) within the ratio and scope of amount for outsourced operation defined in the investment utilization plan for the year of the specific fund. For related operations, they are supervised by the Supervisory Committee of the Labor Retirement Fund. The minimum income decided to be distributed each year from the fund may not be below the income calculated with a two-year time deposit interest rate of a local bank. In case of shortage, the treasury will supplement it upon approval by the competent authority. Due to the fact that the Company is not entitled to take part in the operation and management of the said fund, it is impossible to disclose the categorization of the fair values of planned assets as required in Section 142 of IAS 19. For the fair values of all assets consisting the fund as of December 31, 2018 and 2017, please refer to the annual pension fund utilization report announced by the government.
(8) The current value of defined benefit obligations of the Company is precisely calculated by a qualified actuary. Primary assumptions on the date of measure for the actuary valuation are as follows:

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Item 2018 2017
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Item	2018	2017
Discount rate	0.875%～1.000%	0.875%～1.125%
Future salary increase rate	1.75%～2.00%	1.75%～2.00%
Average duration of defined benefit obligations	5.7～9.1 years	4.4～9.5 years

The assumptions of the death rate in the future are estimated according to the Fifth Experience Mortality Table of the Insurance Industry in the region of Taiwan.

(9) The Company is exposed to the risks below due to the pension fund system of the Labor Standards Act:
Interest Rate Risk
- A reduced interest rate of government bonds will result in increased current values of defined benefit obligations; the return on liability investment in

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planned assets, however, increases, too. Both exercise partial write-off effects on net defined benefit liabilities.

Salary Risk
Calculations of the current values of defined benefits obligations refer to the compensation in the future for members enrolled in the plan. Therefore, the increase in the compensation of members enrolled in the plan will result in the increase in the current value of defined benefits obligations.
(10) If major reasonable possible changes occur, respectively, to actuary assumptions, with other assumptions remaining unchanged, the amount increased (decreased) in the current value of defined benefits obligations is as follows:

Discount rate Increase by 0.25% Decrease by 0.25% ($ 13,829) $ 14,283 ($ 14,493) $ 14,987	Future salary	increase rate
Increase by 0.25% ($ 13,829) ($ 14,493)	Increase by 0.25% $ 13,893 $ 14,594	Decrease by 0.25%
		($ 13,521)
		($ 14,186)

In practice, due to the fact that actuary assumptions might be pegged to one another, the possibility of variation in a single assumption is minimal. In other words, the above-mentioned sensitivity analysis might not be able to reflect the actual variation in the current value of defined benefits obligations. In addition, in the above-mentioned sensitivity analysis, the current value of defined benefits obligations on the end date of the reporting period is precisely calculated adopting the projected unit credit method; it is measured on the same basis as that for the defined benefit liability on the balance sheet. The method adopted for the sensitivity analysis of the current term is the same as the assumption and that adopted in the previous term.

(11) The expected appropriation and payment for the above-mentioned defined benefits plan in 2019 of the Company are $11,705 thousand and $16,351 thousand, respectively.
(1) The Company has defined appropriation guidelines in place for retirement that are applicable to national employees as required by the Labor Pension Statutes. The Company sets aside 6% of the monthly salary to be the labor pension for the personal accounts of employees with the

327

Labor Insurance Bureau in accordance with the labor pension system defined in the Labor Pension Statutes that employees choose to apply. The payment of the pension fund can be done on a monthly basis or in a lump sum according to the amount in the personal retirement account of each employee and the accumulated income. After the Company appropriates a fixed amount to the Labor Insurance Bureau under this plan, they are relieved of the legal or constructive duty to pay additional values.

(2) The pension fund cost recognized by the Company from January 1 through December 31, 2018 and 2017 was $8,118 thousand and $7,902 thousand, respectively. The amount of net defined benefit liability according to the above-mentioned defined appropriation plan by the Company as of December 31, 2018 and 2017 was $1,407 thousand and $1,343 thousand, respectively.
The amount of the pension fund cost from the above-mentioned defined appropriation plan recognized under profits and losses is as follows as a single entry by the type of function:

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January 1 to January 1 to
Item
December 31, 2018 December 31, 2017
Operating cost $ 6,513 $ 6,244
Operating expenses
Selling Expense 364 353
Management Expense 965 1,003
Research and Development
276 302
Expense
Subtotal 1,605 1,658
Total $ 8,118 $ 7,902
Item December 31, 2018 December 31, 2017
Premium For Lease - Lessor $ 50 $ 50
－
Pick-up deposit 3,582
Others 443 483
Total $ 4,075 $ 533
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(XIV) Guarantee deposits

－
(XX) Other non-current liabilities Others

Item Disposal of investment unrealized deferred income	December 31, 2018 $ 22,192	December 31, 2017 $ 22,192

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(XXI) Share capital

1. Common Stock and Preferred Stock

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Item December 31, 2018 December 31, 2017
Rated shares (Thousand shares) 1,000,000 1,000,000
Rated Share Capital $ 10,000,000 $ 10,000,000
Shares of issued and fully paid
(Thousand shares)
- Common Shares 906,620 906,620
- Preferred Shares 20,000 20,000
- Issued Shares Total (Thousand
926,620 926,620
shares)
Issued Share Capital - Common Shares $ 9,066,203 $ 9,066,203
Issued Share Capital - Preferred Shares 200,000 200,000
Issued Share Capital Total $ 9,266,203 $ 9,266,203
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The common stock and preferred stock is worth NT$10 per issued share. Each share is entitled to one voting right and the right to collect dividends.

2.preferred stock, 20,000 thousand shares in total, was issued upon capital increase in cash in August 1984 of the Company, with the rights and obligations as follows:
(1) In case of any earnings in the final accounting books, 6% for the preferred stock dividend shall first be assigned. For the remainder of earnings that may be distributed, the distribution may be decided by the Board of Directors according to the holding ratio of common stock and preferred stock and distribution may begin upon approval through the shareholders’ meeting.
(2) Remaining properties of the Company, if any, are prioritized for the distribution.
(3) For the remainder, the rights available are identical to those of the common stock.

(XX) Capital reserve

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

Item December 31, 2018 December 31, 2017
Treasury Stock Transaction
$ 177,734 $ 146,379
Premium
Gifted assets 2,786 1,061
Recognition of Changes in
13 6
Ownership Equity in Subsidiaries
Total $ 180,533 $ 147,446
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As is required by the Company Act, the premium from releasing shares in excess of

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their denomination and the capital reserve as a gift and obtained, besides the option to be used for making up deficits, when the Company does not have accumulated deficits, new shares or cash may be issued proportionally to the existing shares among the shareholders. In addition, according to applicable requirements of the Securities Exchange Act, when the above-mentioned capital reserve is set aside to be the capital, the sum of such appropriations a year may not exceed 10% of the paid-in capital size. In the event that such shortage is not the result of earnings reserve already appropriated to make up capital deficits, the Company may not appropriate the capital reserve. In addition, the variation in the ownership equity in the subsidiaries and dividends yet to be claimed by shareholders past the deadline that are recognized may be used to make up the deficits.

(XXIII) Retained earnings

As is required by the Articles of Incorporation, in cases of earnings in the final accounting book, after taxes are paid, deficits are made up, 10% as the legal reserve is set aside, and the special reserve is set aside or reversed according to the deductibles for shareholders’ equity that occurs for the year, they are the earnings that may be distributed for the year. Together with the accumulated earnings yet to be distributed from the previous year, they are the accumulated earnings available for distribution and from which 6% as the preferred stock dividends shall be distributed first. If the dividends of preferred stock for each year are not fully assigned, the shortage is entitled to prioritized distribution and be made up for the year in the next year where earnings are available for distribution. The remaining earnings yet to be distributed are to be distributed after the Board of Directors has stipulated the distribution proposal according to regulatory requirements, the dividend policy, and funding status, among others, and submitted it to and have it approved through the shareholders’ meeting.
In addition, for information on the distribution policy, estimation and recognition basis, and actual assignment of remunerations for employees and directors and supervisors, refer to Note 6(30) for details.
The Company’s dividend policy is as follows:
The industrial environment that the Company is in is changeable and the corporate life cycle is at the steady growth phase, the economic settings will be kept track of in order to realize sustainable management. In light of the Company’s long-term financial planning, future funding demand, and protection over shareholders’ rights, the cash dividend released each year by the Company is not below 10% of the sum

330

of cash and share dividends combined that are released for the year (excluding the 6% dividend for preferred stock).

The legal reserve, besides being used to make up for the Company’s deficits and be issued to shareholders in the form of new share or cash according to their original holding ratio, may not be used. For new shares or cash released, the limit is 25% of the paid-in capital size.
For the distribution of earnings, the Company appropriates and reverses the special reserve according to FSC Issuance No. 1010012865 letter dated April 6, 2012 and FSC Issuance No. 1010047490 letter dated November 21, 2012, and the requirements indicated in the “Applicability Questions and Answers of Appropriating Special Reserve after the International Financial Reporting Standards (IFRSs) are adopted” shall be followed. Later, in case of any reversal of the net worth of other equity deductibles, earnings may be distributed with regard to the reversal.
The Company held the general shareholders’ meetings on June 15, 2018 and June 16, 2017, respectively, where the earnings distribution proposals for 2017 and 2016 were approved as follows:

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Distributed Earnings Per Dividend (NT$)
Items 2017 2016 2017 2016
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Appropriation of Legal	$	328,864	$	240,069				－
Reserve						－
Appropriation of Special	(	17,380)	(	42,114)				－
Reserve (Reserved)						－
Preferred Stock Dividend -		12,000		12,000	$	0.60	$	0.60
Cash
Preferred Stock Shareholder		20,000		20,000		1.00		1.00
Bonus - Cash
Common Stock Shareholder		906,620		906,620		1.00		1.00
Bonus - Cash
Common Stock Shareholder		－		－				－
Bonus - Stock						－

With regard to the distribution of earnings as stipulated by the Board of Directors and decided through the shareholders’ meeting, you may search the Market Observation Post System.

The 2018 earnings distribution proposal of the Company is still pending stipulation by the Board of Directors and decision through the shareholders' meeting. For related information, you may search the Market Observation Post System after related meetings are called for.

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(XXIV) Other equity items

(XXIV) Other equity items
Item January 1, 2018 Balance Effect of Retrospective Application and Retrospective Restatement Other equity adjusted items is recognized directly Rendering Profit and Loss Items Rendering Retained Earnings Portions of adopting the equity method Income tax recognized as related to other equities items December 31, 2018 Balance	Exchange Differences on Translation of Foreign Financial Statements ($ 119,538) －－－－ ( 121,532) 34,990 ($ 206,080)	Unrealized Income from Financial Assets at Fair Value through Other Comprehensive Income $ - 1,191,225 ( 72,367) －－ ( 173,139) － $ 945,719	Unrealized Income from Financial Assets Available for Sale $ 1,007,410 ( 1,007,410) －－－－－ $ -	Total
				$ 887,872 183,815 ( 72,367) －－ ( 294,671) 34,990 $ 739,639

Item January 1, 2017 Balance Other equity adjusted items is recognized directly Rendering Profit and Loss Items Portions of adopting the equity method Income tax recognized as related to other equities items December 31, 2017 Balance	Exchange Differences on Translation of Foreign Financial Statements $ 27,250 －－ ( 109,813) ( 36,975) ($ 119,538)	Unrealized Income from Financial Assets at Fair Value through Other Comprehensive Income (Note)	Unrealized Income from Financial Assets Available for Sale $ 835,015 44,511 － 127,884 － $ 1,007,410	Total $ 862,265 44,511 － 18,071 ( 36,975) $ 887,872

Note: The Company started to adopt IFRS 9 on January 1, 2018 and chooses not to rearrange the comparison period according to the transitional requirements in IFRS 9.

(XXV) Treasury stock

As of December 31, 2018 and 2017, the value of treasury stock bought back by the

332

Group was consistently NT$0. <1

The current-term variation in the investments in the Company's stock held by subsidiaries that is considered to be treasury stock is summarized as follows:

January 1 to December 31, 2018

				January 1 to	December 31, 2018
Name of subsidiary GPPC Chemical Corporation Total	Type Common Shares Preferred Shares	Balance of	at beginning term Amount $ 72,312 49,858 $ 122,170	Addition of Current Term Shares Amount － $ - －－－ $ -	Decrease of Current Term Shares Amount 2,881 $ 66,593 －－ 2,881 $ 66,593	End at beginning of term
		Shares 3,128 1,776 4,904		Shares －－－	Shares 2,881 － 2,881	Shares 247 1,776 2,023	value
							$ 5,719 49,858 $ 55,577

January 1 to December 31, 2017

Name of subsidiary GPPC Chemical Corporation Total	Type Common Shares Preferred Shares	Balance a	t beginning of term Amount $ 149,746 49,858 $ 199,604	Addition of Current Term Shares Amount － $ - －－－ $ -	Decrease of Current Term Shares Amount 3,350 $ 77,434 －－ 3,350 $ 77,434	End at beginning of term	End at beginning of term
		Shares 6,478 1,776 8,254		Shares		Shares 3,128 1,776 4,904	value
				－－－			$ 72,312 49,858 $ 122,170

(1) As of December 31, 2018 and 2017, the value of profits from disposing of the Company’s shares by subsidiaries and transferred to be capital reserve - transaction value of treasury stock was T$28,266 thousand and T$13,455 thousand, respectively.
(2) From January 1 through December 31, 2018 and 2017, the value of cash dividends received by subsidiaries from the parent company and transferred to be capital reserve - transaction value of treasury stock was $3,089 thousand and $9,320 thousand, respectively.
(3) As of December 31, 2018 and 2017, the fair value of the Company’s shares held by subsidiaries was $66,946 thousand and $158,686 thousand, respectively. .
(4) The Company’s shares held by subsidiaries are treated as the treasury stock and are not entitled to participation in the capital increase in cash and voting rights of the Company. The remaining rights are the same as those of general shareholders.

333

(XXVI) Operating revenue

perating revenue
Item Income from contracts with customers Sales income	January 1 through December 31, 2018 $ 20,305,094	January 1 to December 31, 2017
		$ 18,931,639

(1) Breakdown of income from contracts with customers

Income of the Company is from products and services that are transferred at a certain time point. The income can be further broken down into the following primary product types:

product types:
Main product type Sales income Petrochemical products Plastic product Hydrogen product Steam power products Nylon product Raw materials resale Total	January 1 through December 31, 2018 $ 11,726,280 5,320,817 131,383 427,396 2,682,897 16,321 $ 20,305,094	January 1 to December 31, 2017
		$ 11,532,394 4,946,060 115,857 391,946 1,939,323 6,059 $ 18,931,639

Balance of Contract

Related contract assets and liabilities recognized by the Company that are related to contracts with customers are as follows:

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

Item December 31, 2018 December 31, 2017
----- End of picture text -----

Item	December 31, 2018	December 31, 2017
Contract Assets: N/A.		(Note 1)
Contract Liability - Current
Product Sales	$ 20,881

(1) The Company started to apply applicable requirements of IFRS 15 on January 1,
Obligations that require transfer of products or services to the customer upon collection of or permission to collect considerations as agreed upon in the contract are recognized as contract liabilities. The amount re-categorized from

334

pre-collected payments to contract liabilities as of January 1, 2018 totaled NT$ 39,568 thousand.

(2) Major variation in contract assets and contract liabilities

The variation in contract assets and contract liabilities mainly comes from the time point when obligations are fulfilled and the difference in customer payment time points. There are no major changes in contract liabilities from January 1 through December 31, 2018 of the Company.

(3) Contract liabilities at beginning of term are recognized as income.

Item Contract liabilities balance at beginning of term are recognized as income Product Sales	January 1 through December 31, 2018
	$ 39,568

(4) Contract fulfillment obligations already satisfied in the previous term are recognized as income for the current term.

There were no contract fulfillment obligations that were already satisfied (or partially satisfied) from January 1 through December 31, 2018 of the Company. Due to the variation in the transaction price or the variation in consideration recognition limits, however, income recognition was adjusted for the current term.

(5) Contracts with customers yet to be fulfilled

For contracts with customers yet to be fulfilled by the Company as of December 31, 2018, as long as the duration of the contract is less than a year, they are expected to be fulfilled within the coming year and be recognized as income.

Contract cost-related assets: None.

335

(XXVII) Other income

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

January 1 through January 1 to
Item
December 31, 2018 December 31, 2017
Interest income $ 16,629 $ 4,008
Rent income 303 279
Dividend Income 27,824 36,754
Defective Income 1,369 3,175
Management Income 8,400 8,400
－
Subsidization Income 3,700
Overpayment Refunds of Air －
3,042
Contaminant Income
Remunerations for
409 402
directors/supervisors Income
Others 556 384
Total $ 62,232 $ 53,402
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(XXVIII) Other profits and losses

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

January 1 through January 1 to December
Item
December 31, 2018 31, 2017
Net Loss Disposal of Property,
($ 180) ($ 4,447)
Plant, and Equipment
Net foreign currency exchange
65,052 ( 53,042)
benefit (loss)
Spares short and retirement loss ( 757) ( 2,506)
Others ( 970) ( 43)
Total $ 63,145 ($ 60,038)
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(XXIX) Financial cost

ancial cost
Item Interest Expense Decrease: the capitalization amount of the assets that meet the requirements Total	January 1 through December 31, 2018 $ 419 － $ 419	January 1 to December 31, 2017
		$ 447 － $ 447

336

(XXX) Employee benefits, depreciation, depletion and amortization expenses

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

January 1 to December 31, 2018 January 1 to December 31, 2017
For For For
For operating
Property operating Total operating operating Total
cost
expense cost expense
Employee Benefits
Expense
Salary Expense $ 438,021 $ 151,162 $ 589,183 $ 423,184 $ 143,656 $ 566,840
Labor Insurance
27,652 8,363 36,015 26,615 8,059 34,674
Expense
Pension Expense 12,767 5,930 18,697 14,258 5,437 19,695
Director － 94,333 94,333 － 95,618 95,618
remuneration
Other Employee
8,791 39,542 48,333 8,654 40,979 49,633
Benefits Expense
Depreciation Cost 687,612 13,543 701,155 697,750 16,291 714,041
－－
Amortized Expenses －－－－
Total $1,174,843 $ 312,873 $1,487,716 $1,170,461 $ 310,040 $1,480,501
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As of December 31, 2018 and 2017, the number of employees at the Company was 385 and 383, respectively. The number of directors who are not also employees was consistently 5. The calculation basis is the same as that for employee benefits.
As is required by the Articles of Incorporation, the Company shall assign 1% of the profitability for the current year to be the employee remunerations and no more than 2% of profitability for the current year to be the remunerations for directors and supervisors. In cases of accumulated deficits, however, the Company shall make up for them. The profitability for the current year as indicated in the preceding paragraph refers to the profits before remunerations assigned to employees and directors and supervisors are subtracted from pre-tax profits for the current year.
The administration of the Company estimates the remunerations payable to employees and directors and supervisors according to the profitability for the said year and takes into consideration expected value to be released and the upper and lower limit ratios defined in the Articles of Incorporation. The value prior to deduction of remunerations for employees and directors and supervisors from the pre-tax net profit is followed for the estimation. The estimated remunerations for employees between January 1 and December 31, 2018 and 2017 of the Company were $37,478 thousand and $38,908 thousand, respectively, and those for directors and supervisors were $74,956 thousand and $77, 801 thousand, respectively . In case of major variation in the value to be released as decided by the Board of Directors after the date when the annual consolidated financial statement is

337

approved and released, such variation is adjusted from the original recognition to be the annual expenses. If there is still variation in the annual financial statement after it is approved and released, it will be handled as variation in accounting estimates and will be adjusted and booked in the following year.

The Company’s Board of Directors decided on March 21, 2019 and March 22, 2018, respectively, to distribute remunerations for employees in 2018 and 2017 to be $37,478 thousand and $38,900 thousand, respectively and remunerations for directors and supervisors to be $74,956 thousand and $77,801 thousand. The amounts decided to be distributed as mentioned above did not show significant differences from the estimates listed as expenses in the Company’s 2018 and 2017 financial statements. The above-mentioned remunerations are released in cash.
For information on the remunerations for the Company’s employees and directors and supervisors, you may search the Market Observation Post System of Taiwan Stock Exchange.

(XXXI) Income tax

Components of income tax expenses (profits):
(1) Income tax recognized as part of profits and losses

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

January 1 through January 1 to
Item December 31, December 31,
2018 2017
Current income tax expense $ 681,637 $ 488,484
Deferred income tax expenses (profits)
Temporary difference between original
( 1,373) ( 3,799)
generation and rotation
Impact on a change in the exchange －
( 2,048)
rate
Deferred income tax (increase) reduces
( 3,421) ( 3,799)
net change
Previous annual income tax adjustment ( 2,965) ( 1)
Income tax recognized as part of profits
$ 675,251 $ 484,684
and losses expense
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338

(2) Income tax recognized as related to other comprehensive income

Item Advanced income tax Exchange Differences on Conversion of Foreign Operating Agency Deferred income tax Re-measurement of Defined Benefit Plans Impact on a change in the exchange rate Deferred income tax (increase) reduces net change Income tax recognized as part of other comprehensive profits and losses expense	January 1 through December 31, 2018 ($ 34,990) 1,433 ( 2,191) ( 758) ($ 35,748)	January 1 to December 31, 2017
		$ 36,975
		( 1,149) －
		( 1,149) $ 35,826

Adjustments made to the income expenses obtained from accounting and recognized as part of profits and losses for the current year are as follows:

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

January 1
January 1 to
through
Item December 31,
December 31,
2017
2018
Income from Continuing Operation before Tax
$ 3,635,357 $ 3,773,326
(Loss)
Calculating the income tax before tax (profit)
727,071 641,466
at a statutory rate
Effect on income tax of adjusted items
Effect on items excluded in the
( 248,959) ( 276,090)
determination of taxable income
The tax amount to be paid by the minimum －－
tax system
Undistributed surplus plus income tax 203,525 123,108
Deduction of losses incurred in the current －－
period
－－
Deductible losses for the current period
－－
Current offset of investment offset
Current income tax expense 681,637 488,484
Deferred income tax (increase) reduces net
( 3,421) ( 3,799)
change
Previous annual income tax adjustment ( 2,965) ( 1)
Income tax recognized as part of profits and
$ 675,251 $ 484,684
losses expense
----- End of picture text -----

339

The applicable tax rate in 2017 of the Company was 17%. After the revisions made in February 2018, the tax rate for business income tax has been adjusted from 17% to 20% in the Income Tax of the Republic of China, effective in 2018. In addition, the tax rate applicable to undistributed earnings of 2018 will be reduced from 10% to 5%. The Company has evaluated related impacts from income tax regarding the said variation in the tax rate.

3. Balance of income tax assets (liabilities) for the current term

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

Item December 31, 2018 December 31, 2017
Current income tax assets:
None.
Current income tax liability
Current income tax expense $ 681,637 $ 488,484
Decrease: Current prepaid
( 182,783) ( 138,361)
income tax credit
Total $ 498,854 $ 350,123
----- End of picture text -----

4. Balance of deferred income tax assets (liabilities)

January 1 to December 31, 2018

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

Other
Recognized as part Comprehensive
Balance at Balance at end
Item of profits and Income
beginning of term of term
losses Recognition of
Losses
Deferred income tax assets
Unrealized exchange loss $ 2,664 ($ 1,304) $ - $ 1,360
Inventory decline and －－
2,713 2,713
sluggish loss
Employee leave payment －
2,052 349 2,401
obligation
Defined Employee
13,561 481 758 14,800
Benefit Plan
Impairment assessment of －
6,277 1,108 7,385
tangible assets
Total $ 24,554 3,347 758 $ 28,659
Deferred income tax
liability
Depreciation expense tax －
530 ( 74) 456
difference
Land value added tax －－
979,556 979,556
preparation
－
Total $ 980,086 ( 74) $ 980,012
Net increase (decrease)
$ 3,421 $ 758
change
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340

January 1 to December 31, 2017

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

Balance at Recognized as Other Comprehensive
Balance at end of
Item beginning of part of profits Income Recognition
term
term and losses of Losses
Deferred income tax assets
Unrealized exchange loss $ - $ 2,664 $ - $ 2,664
Employee leave payment －
2,249 ( 197) 2,052
obligation
Defined Employee
11,854 558 1,149 13,561
Benefit Plan
Impairment assessment of －－
6,277 6,277
tangible assets
Total $ 20,380 3,025 1,149 $ 24,554
Deferred income tax
liability
Unrealized exchange －
$ 517 ( 517) $ -
profit
Depreciation expense tax －
787 ( 257) 530
difference
Land value added tax －－
979,556 979,556
preparation
－
Total $ 980,860 ( 774) $ 980,086
Net increase (decrease)
$ 3,799 $ 1,149
change
----- End of picture text -----

Deferred income tax asset items that are not very likely realizable and hence are not recognized of the Company

Item December 31, 2018 December 31, 2017 Deferred income tax assets Impairment Loss of $ 686 $ 583 Financial Assets

Unrecognized deferred income tax liabilities relevant to investment
The difference associated with the invested subsidiary, if the time point for reversal of the temporary difference can be controlled by the Company, is very unlikely to be reversed in a foreseeable future; therefore, deferred income tax liabilities are not recognized. The taxable temporary difference in the deferred income tax liabilities relevant to invested subsidiaries and yet to be recognized as of December 31, 2018 and 2017 was $1,079,681 thousand and $781,837 thousand, respectively.
7.The Company’s profit-seeking enterprise income tax had been verified by the tax authority till 2016.
Due to the fact that uncertainties remain for the distribution of earnings as determined through the 2019 shareholders' meeting, consequences of the additional

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potential income tax levied of undistributed earnings of 2018 cannot be reliably determined yet .

(XXXII) Variation in liabilities from fund-raising activities

Item Guarantee Deposits Balance at beginning of term Net change in cash flow Balance at end of term	January 1 through December 31, 2018 $ 533 3,542 $ 4,075	January 1 to December 31, 2017
		$ 533 － $ 533

(XXXIII) Earnings per share

The basic earnings per share of the Company is calculated by the net profits (losses) for the current term divided by the number of weighted average common stock shares outstanding. The additional shares as a result of undistributed earnings or capital reserve transferred capital increase, on the other hand, is adjusted and calculated retroactively. If the Company may choose to issue employee remunerations in the form of shares or cash, in the calculation of diluted earnings per share, it is assumed that issuance of shares will be adopted for employee remunerations and the weighted average shares outstanding are included in the calculation when the said common stock exercises the diluting effect in order to calculate the diluted earnings per share. When the diluted earnings per share are calculated prior to issuance of shares as employee remunerations as determined in the following year, the diluting effect from the said potential common stock shall continue to be taken into consideration, too.

January 1 to December 31, 2018 Weighted average number of shares outstanding (thousand shares) (NT$) After-tax amount Earnings per share $ 2,960,106 905,338 $ 3.26 ( 12,000) 2,948,106 － 2,005	January 1 to December 31, 2018 Weighted average number of shares outstanding (thousand shares) (NT$) After-tax amount Earnings per share $ 2,960,106 905,338 $ 3.26 ( 12,000) 2,948,106 － 2,005	January 1 to December 31, 2018 Weighted average number of shares outstanding (thousand shares) (NT$) After-tax amount Earnings per share $ 2,960,106 905,338 $ 3.26 ( 12,000) 2,948,106 － 2,005	January 1 to December 31, 2017	January 1 to December 31, 2017	January 1 to December 31, 2017
After-tax amount $ 2,960,106 ( 12,000) 2,948,106 －	Weighted average number of shares outstanding (thousand shares) 905,338 2,005		After-tax amount $ 3,288,642 ( 12,000) 3,276,642 －	Weighted average number of shares outstanding (thousand shares) 900,971 1,535 902,506	(NT$) Earnings per share
					$ 3.64
					$ 3.63
$ 2,948,106	907,343	$ 3.25	$ 3,276,642

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VII. Related Party Transaction

(I) Parent company and the ultimate controller

The Company does not have an ultimate parent company and hence the Company is the ultimate controller.

(II) Name of related party and the relationship

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Name of related party Relationship with the Company
----- End of picture text -----

me of related party and the relationship Name of related party	Relationship with the Company
GPPC Chemical Corporation	Subsidiary
GPPC Investment Corporation	Subsidiary
Videoland Inc.	Subsidiary
KK Enterprise	Subsidiary
GPPC Hospitality and Leisure Inc.	Subsidiary
Zhenjiang Chimei Chemical Company	Affiliate
Coos Venture Capital Corp.	Substantially related party
Heqiao International Investment	Substantially related party
Corporation
All directors, general manager, and vice	Primary management
general manager

(III) Major transactions with related parties

1. Sales

jor transactions with related parties Sales
Substantially related party Subsidiary Affiliate Total	January 1 through December 31, 2018 $ 1,103,107 3,382 $ 1,106,489	January 1 to December 31, 2017
		$ 915,729 3,650 $ 919,379

The Company sells AM to its subsidiaries at the contract price. The contract purchase or selling price is based on the mean price in the three regions, that is, FOB Korea, CFR Taiwan, and CFR SE Asia, in the respective issues of Styrene intelligence reports for the month according to Platt’s Far East Petrochemical Scan. The quantity is 3,000 to 6,000 tons a month. The payment method is settlement at the end of each month and paid off 45 days following settlement. If the subsidiary fails to make payments as scheduled, the goods will be on hold and interest will be calculated at the one-year time deposit annual rate of the Bank of Taiwan as of

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January 1 of the specific year. Such holding period, however, is limited to 3 months at maximum. From January 1 through December 31, 2018 and 2017, the payments for goods and the interest involved that the Company received from its subsidiaries were $0 and $61 thousand, respectively.

Except for those mentioned above, there are no significant differences in the remaining selling price and sales trading conditions for related parties and those for ordinary customers of the Company.

2. Purchases

Substantially related party Subsidiary	January 1 through December 31, 2018 $ 2,739	January 1 to December 31, 2017 $ 2,803

There are no significant differences in the buying price and purchases trading conditions for related parties and those for ordinary customers of the Company.

The creditor’s rights and debts between the Company and related parties (all without including the interest) are as follows:
(1) Accounts receivable

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

Substantially related party December 31, 2018 December 31, 2017
Subsidiary $ - $ 77,812
－
Affiliate 735
Total $ 735 $ 77,812
----- End of picture text -----

(2) Other payables

Substantially related party Subsidiary	December 31, 2018 $ 6,415	December 31, 2017 $ -

4. Property leases

(1) Assets for rent

January 1 to December 31, 2018

Lessee/Substantially related party Subsidiary Substantially related party Total	Leased Object 10F, No. 1, Sec. 4, Nanjing East Road, Taipei City 10F, No. 1, Sec. 4, Nanjing East Road, Taipei City	Rent income $ 183 119 $ 302	Pre-collected rent $ 57 71 $ 128	Deposit
				$ 50 － $ 50

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January 1 to December 31, 2017

Lessee/Substantially related party Subsidiary Substantially related party Total	Leased Object 10F, No. 1, Sec. 4, Nanjing East Road, Taipei City 10F, No. 1, Sec. 4, Nanjing East Road, Taipei City	Rent income $ 160 119 $ 279	Pre-collected rent $ 57 71 $ 128	Deposit
				$ 50 － $ 50

Note:  The Company already signed business lease contracts for offices in coming years with its subsidiaries. As of December 31, 2018 and 2017, as agreed, the Company collected forward notes in advance in the worth of $288 thousand and $432 thousand, respectively, to facilitate cashing at time of actual transaction.
The above-mentioned properties for rent refer to part of the offices of the Company put up for rent. The rent is negotiated between the parties reflective of the market price and calculated and included in the lease contract. The rent is collected on a yearly basis or with the forward notes issued at once upon signing of the contract.

(2) Rented assets

Rented assets
Leaser - Substantially related party Subsidiary	Leased Object HP3 rubber crushing area storage	Rent expenditure
		January 1 through December 31, 2018 $ 72	January 1 to December 31, 2017 $ 72

Note: The rent is negotiated between the parties reflective of the market price, calculated, and included in the lease contract and paid on a monthly basis.

5. Others

5. Others
Item Management Income (Account other income) (Note 1) Remunerations for directors/supervisors Income (Account other income) Generation pad technical service fee (Note 2)	Substantially related party/ Name GPPC Chemical Corporation Subsidiary Subsidiary	January 1 through December 31, 2018 $ 8,400 409 3,965	January 1 to December 31, 2017
			$ 8,400 402 3,285

Note: (1) GPPC Chemical Corporation values the experience and talent that the

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Company has and hence outsourced management and sales, among other operations, to the Company. The parties have reached an agreement and signed the contract.

(2) The various expenses involved in the technical support provided on site by representatives of the Company as authorized by the subsidiary are to be written off according to the actual expenses. The technical service fees collected by the Company are listed as the deductible under various expenses to be written off.

(IV) Information on the compensation of the primary management

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January 1 through January 1 to December
Item
December 31, 2018 31, 2017
Salary and other short-term employee
$ 119,186 $ 116,436
benefits
－－
Separation Benefits
Post-retirement Benefits 3,923 3,995
－－
Other long-term benefits
－－
Share-based Payment
Total $ 123,109 $ 120,431
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VIII. Pledged Assets

Pledging of Real Estate, Plants and Equipment

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

December 31, December 31,
Item Arrest (quality) use
2018 2017
Comprehensive credit line,
Land $ 3,185,217 $ 3,185,217
purchase guarantee
House and Comprehensive credit line,
361,517 400,655
Building purchase guarantee
Machinery and Comprehensive credit line
1,025,622 1,165,511
Equipment guarantee
Total $ 4,572,356 $ 4,751,383
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IX. Major or Liable and Unrecognized Contract Commitments

Endorsement and guarantee: None
Notes and certificates of indebtedness for refundable deposits

The Company issues promissory notes showing the specific amount and certificates of indebtedness to financial institutions to show its commitment to paying off the loans. As of December 31, 2018 and 2017, the amounts were USD6,000 thousand and NTD5,050,000 thousand and USD29,000 thousand and NTD4,380,000 thousand,

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respectively.

Notes and collaterals for guarantee deposits
The notes and collaterals for guarantee deposits collected by the Company to ensure fulfillment of contracts were worth NTD129,879 thousand, SGD208 thousand, EUR730 thousand, USD2,710 thousand, and JPY1,850 thousand and NTD160,799 thousand, SGD208 thousand, EUR730 thousand, USD2,710 thousand, and JPY127,850 thousand as of December 31, 2018 and 2017.
The balance of the Letters of Credit issued by the Company yet to be used as of December 31, 2018 and 2017 totaled USD7,700 thousand, NTD669,446 thousand, EUR59 thousand, and USD4,865 thousand, and NTD1,283,800 thousand, respectively.
As of December 31, 2018 and 2017, the major capital expenditure on real estate, plants and equipment for which a contract had been signed yet to be paid was $39,973 thousand and $126,903 thousand, respectively.
As is required by the contract on the purpose of raw materials entered into by and between the Company and CPC Corporation, Taiwan (CPC Corporation), the Company shall purchase ethylene, benzene, and butadiene in certain quantities from CPC Corporation each year. If the annual purchases made by the Company fall short of the minimum contract quantities, CPC Corporation may adjust the supply volume for the coming year down, depending on the circumstances. In addition, the ethylene, benzene, and butadiene that the Company promises to purchase from CPC Corporation are meant as the raw materials for the factory to produce styrene and acrylonitrile butadiene styrene copolymer resins. Unless with approval from government agencies or as internal allocation to be used as the raw materials for petrochemical products, they may not be used for other purposes or be re-sold (if, in order to meet the needs for allocating petrochemical products and with prior written consent from CPC Corporation in advance, the Company may assign all or part of the ethylene, benzene, and butadiene to be used by petrochemical users of CPC Corporation as raw materials for petrochemical products). Otherwise, CPC Corporation may discontinue the supply of ethylene, benzene, and butadiene at any time and terminate the contract.
In order to meet the needs of manufacturing ABS products, the Company purchases butadiene from Formosa Petrochemical Corporation as the raw material and signs the trading contract. It is guaranteed in the contract that the Company shall purchase at least 100 tons of butadiene a month from Formosa Petrochemical Corporation to be the raw material for products such as ABS.
In order to meet the needs of manufacturing ABS products, the Company purchases propenenitrile from China Petrochemical Development Corporation as the raw material and signs the trading contract. It is guaranteed in the contract that the Company shall

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purchase at least 3,600 to 7,200 tons of China Petrochemical Development Corporation a month to be the raw material for products such as ABS.

X. Major disaster losses: None.

XI. Major subsequent matters: None.

XII. Others

(I) Seasonal or cyclic interpretations of interim operations

Operations of the Company are not affected by seasonal or cyclic factors.

(II) Capital Risk Management

The Company manages capital in order to keep a normal capital foundation and, by optimizing the balance of debts and equities, maximize the rewards for shareholders. Related costs, risks, and returns are examined and measured periodically in order to ensure an optimal profitability level and financial ratio. When it is necessary, various fund-raising methods are adopted in order to balance the overall capital structure and to support the various capital expenditures, operating funds, pay off debits, expenditure on dividends in the future.

(III) Financial Instruments

1. Financial instruments by the type

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Financial Asset December 31, 2018 December 31, 2017
Financial Assets at Fair Value through Other Comprehensive
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Financial Assets at Fair Value through Other Comprehensive
Income
Equity Instrument	$	295,533	$	-
Financial assets available for sale
Equity Instrument	－			216,169
Financial assets carried at cost
Equity Instrument	－			46,884
Financial assets measured by amortized cost
Cash and cash equivalents		1,567,675	－
Notes receivable and accounts (including related parties)		1,933,638	－
Other receivables		42,181	－
Refundable deposits		889	－
Loans and accounts receivable
Cash and cash equivalents	－			1,134,630
Notes receivable and accounts (including related parties)	－			2,237,284
Other receivables	－			30,136
Refundable deposits	－		885

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

December 31, December 31,
Financial Liability
2018 2017
----- End of picture text -----

Financial Liability		ecemer , 2018	e	cemer , 2017
Financial liability measured by amortized cost
Accounts Payable	$	1,091,667	$	1,515,676
Increase in Other Accounts Payable - Related Party		488,923		442,990
Guarantee Deposits		4,075	533

2. Financial risk management policy

Daily operations of the Company are subject to impacts by multiple financial risks, including market risk (exchange rate risk, interest rate risk, and price risk), credit risk, and liquidity risk. In order to reduce related financial risks, the Company is devoted to identify, evaluate, and circumvent uncertainties on the market and to reduce potential undesirable impacts of variation on the market on the financial performance of the Company.

For the above-mentioned financial risks, the Company has established suitable policies, procedures, and internal control according to related regulations. Important financial activities need to be reviewed by the Board of Directors according to applicable regulations and the internal control system. While a financial plan is being implemented, the Company needs to strictly follow applicable financial operating procedures about the overall financial risk management and division of responsibilities.

Property and Extent of Major Financial Risks
(1) Market Risk

The market risk of the Company is the risk of volatility in fair value or cash flows of financial instruments as a result of the varying prices on the market. Mark risk mainly includes exchange rate risk, interest rate risk, and price risk.

Exchange Rate Risk

Due to the fact that the business that the Company is engaged in involves several non-functional currencies (the functional currency for the Company is New Taiwan Dollar), it is under the impacts of fluctuating exchange rates. Information on foreign currency assets and liabilities with major impacts from fluctuating exchange rates is as follows:

349

Item (Foreign currency: functional currency) Financial Asset Monetary item USD: NTD Non-monetary item USD: NTD Financial Liability Monetary item USD: NTD	December 31, 2018 Foreign currency amount Foreign currency against functional currency exchange rate New Taiwan Dollar Amount $ 52,430 30.715 $1,610,387 273,179 30.715 8,390,693 11,159 30.715 342,749	December 31, 2018 Foreign currency amount Foreign currency against functional currency exchange rate New Taiwan Dollar Amount $ 52,430 30.715 $1,610,387 273,179 30.715 8,390,693 11,159 30.715 342,749		December 31, 2017	December 31, 2017
	Foreign currency amount $ 52,430 273,179 11,159	Foreign currency against functional currency exchange rate 30.715 30.715 30.715	Foreign currency amount $ 46,274 229,385 12,330	Foreign currency against functional currency exchange rate 29.76 29.76 29.76	New Taiwan Dollar Amount
					$1,377,114 6,826,498 366,941

Note: When non-monetary assets in foreign currencies are measured at historical exchange rate on the transaction date, due to the fact that there are no major impacts on the individual financial statement, they are not disclosed.

The sensitivity analysis of the exchange rate risk facing the Company focuses mainly on the primary monetary items and non-monetary items in foreign currencies on the end date of the financial reporting period and the impacts on the profits and losses and equities of the Company from appreciation/depreciation of related foreign currencies. When the foreign currency exchange rate rises/falls by 1%, the after-tax net profits of the Company from January 1 through December 31, 2018 and 2017 would increase/decrease by $10,141 thousand and $8,384 thousand, respectively, and the equities would increase/decrease by $83,907 thousand and $68,265 thousand, respectively.

In addition, the unrealized foreign currency exchange losses recognized for January 1 through December 31, 2018 and 2017 of the Company’s currency items totaled, respectively, $6,802 thousand and $15,669 thousand, primarily because of the impacts from fluctuating US Dollar exchange rates.

 Interest Rate Risk

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equivalents held at floating interest rates. Because the Company periodically evaluates the changing trends in interest rate and responds in a timely manner, it is expected that no major risks associated with changing interest rates on the market will occur. If the borrowing interest rate increases or decreases by 10 base points, with all the other factors remaining unchanged, the after-tax net profits of the Company for January 1 through December 31, 2018 and 2017 will not be impacted significantly.

 Price Risk

Due to the fact that investments held by the Company are mainly categorized as financial assets at fair value through other comprehensive income in the Balance Sheet (financial assets available for sale and carried at cost in 2017), the Company is exposed to the price risk of equity instruments. In order to manage the price risk associated with investments in equity instruments, the Company diversify the portfolio and the diversification approach is based on the upper limits set by the Company. Prices of financial instruments such as financial assets at fair value through other comprehensive income (financial assets available for sale and carried at cost in 2017) invested in by the Company will be affected by the uncertainty of future values of the said investment target. If the price of such financial instruments rises or falls by 1%, with all the other factors remaining unchanged, the equities for January 1 through December 31, 2018 and 2017 would increase/decrease by $2,955 thousand and $2,162 thousand, respectively.

(2) Credit risk

Credit risk is the risk of financial losses suffered by the Company as a result of the customer or the counter party of a financial instrument unable to fulfill contract obligations. The credit risk of the Company is caused the operating activities (mainly accounts and notes receivable) and financial activities (mainly bank deposits and various types of financial instruments). Operation-related credit risk and financial credit risk are managed separately.

 Operation-related credit risk

The operating unit follows the Company’s policy, procedure, and control over customer credit risk while managing customer credit risk. The credit risk evaluation of all customers includes comprehensive evaluation of the customer’s financial standing, rating from a credit evaluation institution, prior transaction experiences, current economic environment, and internal evaluation done by the

351

Company, among other factors. In addition, the Company uses certain credit reinforcing instruments when the timing is right (such as advance collection of payments) in order to reduce the credit risk of specific customers.

 Financial Credit Risk

The Finance Department of the Company follows the corporate policy on the management of the credit risk of bank deposits and other financial instruments. Due to the fact that the Company’s counter parties are determined through the internal control procedure and are banks with good credit ratings and financial institutions and companies or organizations of the investment grade and higher that are free of major contract fulfillment concerns, there is no major credit risk.

Information on Credit Risk of Accounts Receivable

The Company assumes adopting the premises provided in IFRS 9 that when payment terms are past due by more than 30 days as agreed upon in the terms and conditions of a contract, it is considered that the credit risk for the financial assets since initial recognition has significantly increased. When the payment terms are more than 365 days past due as agreed upon in the terms and conditions of the contract or when it is quite impossible for the borrower to fulfill the credit obligations by paying the full amount to the Company, breach of contract is considered by the Company to have occurred to the financial assets.

In order to reduce the credit risk, the management of the Company assigns a specialized team to take charge of deciding the loan limit, loan approval and other monitoring procedures in order to ensure that appropriate action has been taken for recovery of accounts receivable. In addition, the Company reviews the recoverable amounts of accounts receivable one by one on the balance sheet date in order to ensure that appropriate impairment losses have been appropriated for accounts receivable that cannot be recovered. For information on the aging analysis of accounts receivable and the variation in allowance loss, please refer to Notes 6(2) and (3) for details.

The credit risk of the Company mainly focuses on the Top 10 sales customers of the Company. As of December 31, 2018 and 2017, the ratios of the above-mentioned customers in the total amount of accounts receivable (including related parties) were 33.97% and 42.12%, respectively.

Exposure to Credit Risk

Quality of credit of financial institutions that the Company does business with is

352

optimal and the Company does business with multiple financial institutions in order to diversify credit risk. The possibility of expected occurrence of defaults is quite minimal. In addition, all the sales of the Company only involve approved third parties with optimal credit ratings. Credit limit is given to the customer according to the loan procedure. Meanwhile, the credit standing of the customer is kept track of continuously with the possibility of recovering accounts receivable being evaluated periodically and adequate allowance loss being appropriated. Therefore, it is believed by the administration that there is no significantly concentrated credit risk for the accounts receivable of the Company. In other words, the maximum exposure amount to credit risk on the balance sheet date of cash and cash equivalents and accounts receivables is equal to the book value of the said financial assets on the balance sheet date.

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Cash and cash equivalents	$ 1,567,675	$	1,567,675	$ 1,134,630	$	1,134,630
Notes receivable	14,419		14,419	15,313		15,313
Accounts receivable
(including related	1,919,219		1,919,219	2,221,971		2,221,971
parties)
Other receivables	42,181		42,181	30,136		30,136

(3) Liquidity Risk

Liquidity risk refers to the risk generated because of the impossibility to settle positions as expected. The Company primarily allocates funds by borrowing from financial institutions and instruments such as cash and cash equivalents in order to accomplish the goal of utilizing funds and stabilizing funds flexibly. The capital and operating funds of the Company are sufficient to support fulfillment of all contract obligations; therefore, there is no liquidity risk as a result of the impossibility to raise funds to fulfill contract obligations.

The table below summarizes the non-derivative financial liabilities of the Company. They are grouped by the related expiration dates. The table is prepared according to the earliest date possible for mandated repayment and the cash flow yet to be discounted. The Company does not expect a significantly earlier time point of occurrence for the analysis of cash flows by the expiration date or a significantly different value from the actual value. The amount of interest yet to be discounted for the interest cash flows paid at the floating rate is inferred according to the yield curve on the balance sheet date. In other words, the amount of the

353

floating rate instrument for non-derivative financial liabilities will change as a result of the difference between the floating rate and the interest rate estimated on the balance sheet date.

Item Non-derivative financial liability Accounts Payable Increase in Other Accounts Payable - Related Party			December 31, 2018	December 31, 2018	December 31, 2018
	Within 6 months $ 1,091,667 488,923	6 months to 12 months $ - －	1 to 2 years $ - －	2 to 5 years $ - －	Over 5 years $ - －	Contract of Cash Flows $ 1,091,667 488,923	Book value
							$ 1,091,667 488,923

Item Non-derivative financial liability Accounts Payable Other payables				December 31, 2017	December 31, 2017
	Within 6 months $ 1,515,676 442,990	6 months to 12 months $ - －	1 to 2 years $ - －	2 to 5 years $ - －	Over 5 years $ - －	Contract of Cash Flows $ 1,515,676 442,990	Book value
							$ 1,515,676 442,990

(IV) Information on Fair Value

1. Fair Value Grade

Grade 1 is the public quotation (without adjustment) of the same asset or liability from an active market.

Grade 2 is the fair value inferred with the input parameters that are directly (price) or indirectly (inferred from price) observable belonging to the said asset or liability besides the public quotation in Grade 1.

Grade 3 is the fair value inferred with the input parameters (not observable parameters) of the asset or liability with a valuation technique that is not based on observable market data.

2. Financial instruments not measured at fair value

The book value of financial instruments not measured at fair value of the Company (including cash and cash equivalents, notes receivable, and accounts receivable (including related parties), other receivables, accounts payable, other payables (including related parties), etc. is the reasonable approximation of fair value. The book value of refundable deposits and guarantee deposits shall be a reasonable basis for estimating the fair value due to the fact that the expected cash flows discounted or not do not result in significant impacts.

354

For financial and non-financial instruments measured at fair value as of December 31, 2018 and 2017, the Company categorized them according to the nature, characteristics, risk, and fair value grade of the asset and liability. Related information is given below:

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December 31, 2018
Financial and non-financial instruments First level Second level Third level Total
Asset
Repeatable fair value
Financial Assets at Fair Value
through Other Comprehensive Income
Financial assets carried -
Non-current
Domestic Stock of
$ 207,011 $ - $ - $ 207,011
Tsec-Listed
Domestic stocks yet to be －
1,061 87,461 88,522
listed (traded over the counter)
Total $ 208,072 $ - $ 87,461 $ 295,533
----- End of picture text -----

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

December 31, 2017
Financial and non-financial instruments First level Second level Third level Total
----- End of picture text -----

Financial and non-financial instruments	First level	Second level	Third level	Total
Asset
Repeatable fair value
Financial assets available for sale－
Non-current
Domestic Stock of Tsec-Listed	$ 216,169	$ -	$ -	$ 216,169

Valuation techniques and assumptions adopted in the measurement of fair value The fair value of financial and non-financial instruments refers to the current strike value of the said instrument when transacted by the willing party (instead of in a compulsory way or through liquidation). The methods and assumptions applied by the Company in the evaluation of the fair value of financial and non-financial instruments are as follows:
(1) For financial instruments meeting the standard terms and conditions and traded on an active market, the fair value is decided with reference to quotations on the market, respectively. The closing price of a listed stock is its fair value. For emerging stocks yet to be listed (traded over the counter), the strike price is the fair price.
(2) For financial instruments that are relatively more complex, the Company measures the fair value according to valuation model independently developed applying the valuation method and techniques widely adopted in the industry.

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Some of the parameters used in this type of valuation model are not information that can be observed on the market and hence the Company has to make appropriate estimates based on assumptions. The fair value of shares of companies yet to go public (be traded over the counter) (excluding emerging stocks with transactions on an active market) held by the Company is estimated by the market-based approach or asset-based approach; the determination is based on the valuation of similar companies, quotations provided by a third party, net corporate worth, and operating condition. In addition, the major unobservable input value is mainly liquidity discount. For the impacts that parameters that are not observable on the market have on financial instruments, please refer to the information in Note 12 (4)-10.

(3) The output of the valuation model is an estimated approximate value and the valuation technique might not be able to reflect all factors concerning the financial instruments and non-financial instruments held by the Company. Therefore, estimated values from the valuation model will be adequately adjusted reflective of additional parameters, such as the model risk or liquidity risk, etc. According to the management policy and related control procedures of the Company for the fair value valuation model, the management believes that adjustment of the valuation is appropriate and necessary in order to adequately present the fair value of financial instruments or non-financial instruments in the balance sheet. The price information and parameters adopted during valuation are carefully evaluated and adequately adjusted reflective of the current market status.
(4) The Company includes credit risk valuation adjustments in the calculation and consideration of the fair value of financial instruments and non-financial instruments in order to separately reflect the credit risk of the counter party and the quality of credit of the Company.
Transfer between Grade 1 and Grade 2 fair values from January 1 through December 31, 2018 and 2017: None.
Variation in Grade 3 financial instruments from January 1 through December 31, 2018 and 2017

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Non-derivative equity instrument - stocks yet to be listed (traded over the counter)

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

Item
January 1 to December January 1 to December
31, 2018 31, 2017
Balance at beginning of term $ - $ -
Effect of IFRS 9 Retrospective －
151,731
Application
－－
Acquisition of Current Term
Disposal of Current Term/ Distributed Capital －－
－
Transferred Out Third level ( 2,020)
Other Comprehensive Income －
( 62,250)
Recognition of Losses
Balance at end of term $ 87,461 $ -
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The Company started to adopt the requirements of IFRS 9 on January 1, 2018 and selectively designated stocks yet to be listed (traded over the counter) carried at cost according to IAS 39 to be measured at fair value through other comprehensive income. Due to the fact that sufficient observable market information is lacking for the fair value adopted, they are transferred to be Grade 3. In addition, the trading volume of emerging stocks held and yet to be listed (traded over the counter) was re-evaluated at the end of March 2018 in order to determine whether it belongs to quotation on an active market. Because the steady trading volume on the market is associated with sufficient transaction occurrence frequency and quantity, pricing information can be provided continuously and sufficient observable market information can be obtained. As a result, the Company transferred the fair value adopted at the end of the month of the said event from Grade 3 to Grade 1.
For the valuation procedure of fair values that are categorized to Grade 3 of the Company, the corporate Finance Department is responsible, through division of labor with external professional valuation institutions, for verifying independently the fair values of financial instruments. With independent sources of data, the valuation outcome closely reflects the market status and data are confirmed to be independent, reliable, consistent with other sources, and reflective of enforceable prices. Meanwhile, the required input values and data and any other necessary adjustment in the fair value are updated periodically in order to ensure reasonable valuation outcome.
Descriptions are provided below regarding the quantification information of significantly unobservable input values and sensitivity analysis of the variation in

357

significantly unobservable input values of the valuation model adopted for the measurement of Grade 3 fair values:

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Major Interval
December 31, Valuation Input value and fair
Item unobservable (weighted
2018 Fair value techniques value relationship
input value average)
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Item	December 31, 2018 Fair value	Valuation techniques	Major unobservable input value	Interval (weighted average)	Input value and fair value relationship
Non-derivative
equity instruments:
Stocks yet to be listed (traded over the counter)	$ 87,461	Market approach /	Liquidity discount	10%	The higher the liquidity discount, the lower the fair value
		Asset-Based
		Approach

The valuation model and valuation parameters adopted by the Company are the results of careful evaluations. Therefore, measurement of fair values is reasonable. The different valuation models or valuation parameters adopted, however, might result in different valuation outcomes. For financial assets and liabilities categorized to be Grade 3, if the valuation parameters vary by 1% base points, impacts on the profits and losses or other comprehensive income for the current term are as follows:

December	31, 2018	31, 2018
Recognized as part of profits and losses Favorable change Unfavorable change $ - $ - $ - $ -	Other Comprehensive Income Recognition of Losses
Favorable change $ - $ -	Favorable change $ - $ 972	Unfavorable change
		($ 971) $ -

358

XIII. Supplementary Disclosures

(I) Related Information on Major Transactions and (II) Reinvestment Businesses

Lending of funds to others: None.
Endorsement and guarantee for others

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The endorsed party Maximum Accumulated ratio Endorsement and
Endorsemen Value of of the value of Endorsement and
Single enterprise balance of guarantee provided
Name of t at end of Actual Endorsement endorsement and Maximum limits of guarantee provided Endorsement and
Limits of endorsement by the subsidiary
endorser/guara term allocated and guarantee guarantee in the net endorsement and by the parent guarantee in
ntor Name of Company Relationship endorsement and and guarantee Balance of value with property worth of financial guarantee company to to the parent Mainland China
guarantee of current guarantee as the collateral statements of the the subsidiary company
term the subsidiary
most recent term
KK Enterprise KK Enterprise Stock option no more than $63,581 $63,581 $42,245 － 6.17% The total value of external Yes No No
di tl h ld 50% of the total endorsements and
(Malaysia) Sdn. 70% subsidiary (RM8,940) (RM8,940) (RM5,940)
limits available at guarantees of the Company
Bhd. the Company for is limited at 50% of the net
endorsement and worth shown in the most
guarantee recent financial statement
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3. Holding of securities at end of term (excluding investments in subsidiaries, affiliates, and joint venture control)

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Relationship with the End of term
Type and name of corporate securities held Book entry
security issuer Thousand Book value Holding Fair value
Grand Pacific Stock Coos Venture Capital Corp. The director of the Financial assets at fair value through other comprehensive 37 $1,284 2.85 $1,284
PCo., Ltd. h i l TECO Nanotech Co., Ltd. C i －h Financial assets at fair value through other comprehensive fi l N 19 － 0.08 －
YODN Lighting Corp. － Financial assets at fair value through other comprehensive fit l N t 165 1,061 0.93 1,061
－ fit l N t
Bridgestone Taiwan Co., LTD. Financial assets at fair value through other comprehensive 1,151 86,177 1.42 86,177
GPPC Chemical Stock China Development Financial Holding C Coos Venture Capital Corp. ti The director of the parent － Financial assets at fair value through other comprehensive Financial assets at fair value through other comprehensive fit fit l l N N t t 21 49 ,297 2071,712 3.80 ,011 0.14 2071,712 ,011
CLimited i YODN Lighting Corp. i －h Financial assets at fair value through other comprehensive fi l N 64 413 0.36 413
Guozong Development Company Limited － Financial assets at fair value through other comprehensive fit l N t 200 － 1.06 －
Guozong Construction Development － Financial assets at fair value through other comprehensive fit l N t 200 － 1.31 －
Bridgestone Taiwan Co., LTD. E t i － Financial assets at fair value through other comprehensive fit l N t 934 69,792 1.15 69,792
Com2B Corporation － Financial assets at fair value through other comprehensive fit l N t 750 － 1.67 －
fit l N t
Grand Pacific Petrochemical Corporation - The parent company of the Financial assets at fair value through other comprehensive 247 5,407 0.03 5,407
t k C fit l N t
Grand Pacific Petrochemical Corporation - The parent company of the Financial assets at fair value through other comprehensive 1,776 61,539 8.88 61,539
f d t k C fit l N t
GPPC Investment Stock China Development Financial Holding C YODN Li ti ghting Corp. The Company is the t di － t f th Financial assets at fair value through other comprehensive Financial assets at fair value throu fit l N t gh other comprehensive 12 631 ,110 1174,,709052 3.54 0.08 1174,,709052
Limited Partnership China Development Advantageous Venture － Financial assets at fair value throu fit l N t gh other comprehensive － 62,637 － 62,637
GOLDENPACIFIC Partnership I CDIB Capital Asia Partners L.P. Li i d P hi － Financial assets at fair value through other comprehensive fi l N － 154,211 － 154,211
I l d － fit l N t －－
EQUITIES LTD. CDIB Capital Global Opportunities Financial assets at fair value through other comprehensive 139,248 139,248
fit l N t
Fund L.P.
GPPC Hospitality Fund KGI Victory Money Market Fund － Financial assets at fair value through other comprehensive 3,375 39,020 － 39,020
Cand Leisure Inc. i i
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359

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Relationship with the End of term
Type and name of corporate securities held Book entry
security issuer Thousand Book value Holding Fair value
Videoland Stock Jeou Tai Technology Group － Financial assets at fair value through other comprehensive 2,007 $61,110 5.96 $61,11
Company limited Global Mobile Corp. － Financial assets at fair value through other comprehensive 1,440 － 0.52 －
－
Great Dream Pictures, Inc. Financial assets at fair value through other comprehensive 1,000 12,283 9.98 12,283
－
China Life Insurance Company Limited Financial assets at fair value through other comprehensive 94,428 2,629,821 2.35 2,629,821
China Development Financial Holding － Financial assets at fair value through other comprehensive 55,504 539,494 0.37 539,494
Partnership CDIB Capital Asia Partners L.P. － Financial assets at fair value through other comprehensive － 132,211 － 132,211
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4. Value of the same security bought or sold accumulatively reaching NT$ 300 million or 20% and above of the paid-in capital size: None

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Company Security At start of term Bought Sold At end of term
Book entry Counter party Relationship
bought or sold Type and name Thousand value Thousand Amount Thousand Selling price Book cost (Losses) Thousand Amount
Financial assets at fair Open trading －－－ 39,829 $460,000 39,829 $460,094 $460,000 $94 －－
KGI Victory value through other market
Videoland Inc. Money Market
comprehensive income
Fund －current
Grand Pacific British Virgin Investments adopting Capital － 60,898 $5,961,548 25,421 785,515 －－－－ 86,319 $7,545,825
Co., Ltd. Land & Sea 798,762
Land & Sea C Zhangzhou i l C Investments adopting initiated and －－－－ 716,901 (N ) －－－－－ 717,809
Capital Corp. Limited 908 (Note)
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Note: It is the adjustment in valuation using the equity method.

Value of real estate obtained reaching NT$ 300 million or 20% and above of the paid-in capital size: None.
Value of real estate dispose of reaching NT$ 300 million or 20% and above of the paid-in capital size: None.

360

Value of sales and purchases with the related parties reaching NT$ 100 million or 20% and above of the paid-in capital size: None

Purchases (Sales) Name of company	Name of counter party	Relationship		Transaction status	Transaction status		Differences in the requirements for the transaction and those for ordinarytransactions and the cause Notes and accounts receivable (payable)	Differences in the requirements for the transaction and those for ordinarytransactions and the cause Notes and accounts receivable (payable)	Differences in the requirements for the transaction and those for ordinarytransactions and the cause Notes and accounts receivable (payable)	Differences in the requirements for the transaction and those for ordinarytransactions and the cause Notes and accounts receivable (payable)
			Purchases (Sales)	Amount	Ratio to all purchases	Loan period	Unit price Loan period Balance			R a t i o t o a l l n o t e s a n d
Grand Pacific Petrochemical Corporation	GPPC Chemical Corporation	Subsidiary of the Company Sales		$1,103,107	5.43%	Based on the Sales Contract	The contract purchase or selling price is based on the mean price in the three regions, that is, FOB Korea, CFR Taiwan, and CFR SE Asia, in the respective issues of Styrene intelligence reports for the month according to Platt’s Far East Petrochemical Scan. Settled at the end of the month and to be completely collected within 45 days after settlement. If collection cannot be fulfilled by the deadline, the one-year time deposit annual rate of the Bank of Taiwan as of January 1 of the specific year will be adopted to calculate the interest. Delinquency is limited to 3 months only. －			－
GPPC Chemical Corporation	Grand Pacific Petrochemical Corporation	The parent company of the Company	Purchase	1,103,107	86.72%	Based on the Purchase Contract	The contract purchase or selling price is based on the mean price in the three regions, that is, FOB Korea, CFR Taiwan, and CFR SE Asia, in the respective issues of Styrene intelligence reports for the month according to Platt’s Far East Petrochemical Scan.	Settled at the end of the month and to be paid off within 45 days after settlement. If it is not paid off by the deadline, the one-year time deposit annual rate of the Bank of Taiwan as of January 1 of the specific year will be adopted to calculate the interest. Delinquency is limited to 3 months only.	－	－

Accounts receivable form related parties reaching NT$ 100 million or 20% and above of the paid-in capital size: None.
Engagement in transaction of derivatives: None.

361

10. Related information on the name and location of the company invested in with direct or indirect major impacts, control, or joint

venture control (excluding investments in Mainland China)

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Name of Name of company Original investment value Number of shares held at end of Profits or Profits or
investing invested in Location Main scope of operation End of End of last Thousand Ratio % Book value losses of the losses from Remark:
Grand Pacific GPPC Chemical No. 66 Changxing Production and distribution $462,953 $462,953 54,200 100.00 $667,979 $45,813 $41,408 Profits or losses from investments
Co., Ltd. Limited Luzhu District, Ethylene cash dividends in the value of
$1,316, the difference between the
the consolidated basis
GPPC Investment 10F, No. 1, Sec. 4, Investment 170,307 170,307 22,032 81.60 286,809 (6,726) (5,488)
Limited Taipei City
Videoland Inc. 3F, No. 480, Production of TV programs, 1,536,404 1,536,404 71,093 62.29 4,402,183 401,764 250,259
District, Taipei Reproduction of domestic
among other trading
KK Enterprise No. 1, Ziqiang 3rd Various trademark paper, 130,026 130,026 9,918 15.73 162,049 54,723 8,608 Comprehensive holding with the
Limited Nankung Production, wholesale, and
GOLDENPACIFIC British Virgin Investment Business 10,510 10,510 75 100.00 680,316 10,806 10,806
EQUITIES
Land & Sea Capital British Virgin Investment Business 2,817,223 2,031,708 86,319 100.00 7,545,825 920,064 905,766 Profits or losses from investments
Corp. $14,298 as a result of
the difference between the
GPPC GPPC Hospitality No. 26, Lane 295, Catering 40,000 － 4,000 100.00 39,586 (414) (414)
Limited and Leisure Inc. Dunhua South
1F
Videoland Inc KK Enterprise No. 1, Ziqiang 3rd Various trademark paper, 280,862 280,862 21,307 33.79 348,100 54,723 18,492
Limited Nankung Production, wholesale, and
GPPC Investment 10F, No. 1, Sec. 4, Investment 35,372 35,372 4,968 18.40 61,255 (6,726) (1,238) Comprehensive holding with the
Limited Taipei City
Videoland Inc. British Virgin Investment Business － 321 －－－ (39) (39) The investment was canceled in
KK Enterprise K.K. Chemical Hong Kong Trademark paper and tape, 5,255 5,255 125 49.90 4,415 (143) (72) With the potential to exercise
Limited Company Limited
Dragon King Inc. Samoa Reinvestment Business 3,258 3,258 100 100.00 4,759 (44) (44)
KK Enterprise Malaysia Trademark paper and tape, 15,995 15,995 1,680 70.00 50,494 12,645 8,852
(Malaysia) Sdn.Bhd.
Bhd.
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362

(III) Information on Investment in Mainland China

1.

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Accumulated Remitted or recovered of Profits or Company Recognition
Name of investment current term Accumulated losses of the direct or of the current End of term Investment
Investing company Main scope of Paid-in capital Investm value remitted Investment amount investment value current term indirect term investment income
company invested in in ent remitted from of the investmen Profits or already
operation size from Taiwan at Book value
Name Mainland Method Taiwan at end of company t holding losses from received as of
China start of current Remitted Recovered current term invested in ratio investments Note (4) current term
term
Note (5) Note (4) Note (5)
Grand Pacific Zhenjiang Production and USD358,850 Note (2) $1,652,206 －－ $1,652,206 $3,251,366 30.40% $988,415 $5,509,893 $473,318
Petrochemical Chimei distribution of (USD52,830) (USD52,830) (USD32,686) (USD179,388) (USD15,496)
Corporation Chemical product lines
Company with SM as the
Limited raw material
and
loading/unloadi
ng, storage,
transportation,
and operation of
their products
and various
types of
chemicals and
fuel oils
Zhangzhou Production of CNY528,000 Note (2) － $716,901 － 716,901 － 30.40% － 717,809 －
Chimei primary-form (USD23,340) (USD23,340) (USD23,370)
Chemical plastic and
Company synthetic resin
Limited
KK Enterprise Zhongshan Trademark HKD12,300 Note (3) 39,135 － $17,626 21,509 15,570 50.00% 7,802 71,508 35,366
KK Adhesion paper and tape, (HKD10,700) (HKD4,550) (HKD6,150) Note (6)
Product etc.
Corporation
Kunshan KK Trademark USD6,100 Note (1) 206,958 －－ 206,958 3,011 100.00% 3,016 211,357 36,061
Adhesion paper and tape, (USD5,168) (USD5,168) Note (6)
Product etc. (Machinery (Machinery
Corporation USD827) USD827)
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363

Investing company Name	Accumulated remittance from Taiwan at end of current term Investment value in Mainland China	MOEA Investment Commission -approved investment value	Requirements of the Investment Board, Ministry of Economic Affairs Investment limit in Mainland China (Note 7)
Grand Pacific Petrochemical	$2,369,107(USD76,170)	$4,923,553(USD160,298)	$15,372,584
KK Enterprise	$228,467(USD5,168、HKD6,150,and machinery	$228,467(USD5,995、HKD6,150)	$675,588

Note: (1) Direct investment.

(2) Re-investment in Mainland China through a third place with approval from the government
(3) Re-investment in Mainland China through a company established in a third place with approval from the government
(4)The holding ratio in re-investments or direct or indirect investments through a company in a third place and book value of the investment at end of term
(5) Profits or losses from direct and indirect investments recognized with the equity method according to the financial statements audited and certified by other CPAs at an international accounting firm in Taiwan or CPAs in other accounting firms certified by the Company. Zhangzhou Chimei Chemical Company Limited was still during its founding stage in 2018; no major profits or losses occurred.
(6)The profits and losses from investments recognized for the current term include realized and unrealized net profits or losses from downstream, upstream, and side-stream transactions.
(7) As is required by the Investment Board, Ministry of Economic Affairs, the accumulated value or ratio of investments in Mainland China may not exceed 60% of the net worth or consolidated net worth (whichever is higher) of the company.
(8)The value of foreign currencies in this table, except for the investment value remitted out of Taiwan, which is measured at historical exchange rate, is consistently converted to New Taiwan Dollar according to the exchange rate on the balance sheet date.

364

Major transactions that have incurred directly or indirectly through a third region with the companies invested in in Mainland China:
(1) Balance of the value and percentage of purchases and corresponding payables at end of term and the percentage: None.
(2) Balance of the value and percentage of sales and corresponding payables at end of term and the percentage:
- January 1 through December 31, 2018 and December 31, 2018

Name of sale company Grand Pacific Petrochemical Corporation KK Enterprise KK Enterprise	Name of counter party Zhenjiang Chimei Chemical Company Limited Zhongshan KK Adhesion Product Corporation Kunshan KK Adhesion Product Corporation	Sales income Accounting for sales Amount Net percentage $ 3,382 0.02% 506 0.05% 26,592 2.78%	Accounts receivable	Accounts receivable
		Amount $ 3,382 506 26,592	Amount $ 735 111 3,265	Accounts receivable Total percentage
				0.04% 0.09% 2.68%

 January 1 through December 31, 2017 and December 31, 2017

Name of sale company Grand Pacific Petrochemical Corporation KK Enterprise KK Enterprise	Name of counter party Zhenjiang Chimei Chemical Company Limited Zhongshan KK Adhesion Product Corporation Kunshan KK Adhesion Product Corporation	Sales income Accounting for sales Amount Net percentage $ 3,650 0.02% 153 0.01% 25,960 2.68%	Accounts	receivable
		Amount $ 3,650 153 25,960	Amount $ - 35 3,077	Accounts receivable Total percentage
				－ 0.03% 2.71%

The transaction requirements are based on the sale prices agreed upon and the payment
collection term is 30 ～ 90 days after monthly settlement.
(3)Property transaction value and the incurred profits or losses: None.
(4) Balance of notes endorsement and guarantee or collaterals at end of term and the purpose: None.
(5) Maximum value, balance at end of term, interest rate bracket, and total value of interest for current term of financing: None.
(6) Other transactions with major impacts on profits or losses of the current term or financial standing: None.

XIV. Information of Operating Department

The Company already disclosed related information of the operating departments in the consolidated financial statement and hence the disclosure is not required in the individual financial statement.

365

IV. If the Company or its affiliates have experienced financial difficulties in the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report, the annual report shall explain how said difficulties will affect the company’s financial situation.

In 2018 or during the current fiscal year up to the date of publication of the annual report, the Company and its affiliate don’t have financial difficulties. The key financial and performance indicators are listed as following for your reference.

I. Financial indicator

ancial indicator
Financial structure	2018	2017
Debits ratios	12.20%	14.16%
Current ratio	247.13%	216.15%
Quick ratio	168.99%	145.83%
Times interest earned ratio	867,726.97	844,244.52
rformance indicator
Profitability ability	2018	2017
Return of Assets	11.83%	14.49%
Return on equity	13.62%	16.88%
Net profit margin	14.58%	17.37%
Earnings per share	3.26	3.64
Average collection days	37	41
Average sales days	33	32

II. Performance indicator

Note: Financial indicators and performance indicators are adopted the individual financial statements of the parent company which is audited by the accountant by International Accounting Standards (IFRS).

366

Seven. A review and analysis of the Company’s financial position and financial performance, and a listing of risks.

I. Financial position: The main reasons for any material change in the Company’s assets, liabilities, or equity during the past 2 fiscal years, and describe the effect thereof. Where the effect is of material significance, the annual report shall describe the measures to be taken in response.
(I) Consolidated financial statement

Unit: New Taiwan Thousand Dollar

Year Item	2018	2017	Difference Amount	Difference Amount	%	Explanatio n
Current Assets	10,852,015	9,474,318	1,377,697		14.54%
Real estate, factory and equipment	7,427,473	7,778,233	(350,760)		(4.51%)
Intangible assets	674,070	674,070	0		－
Other assets	10,906,343	10,073,294	833,049		8.27%
Total assets	29,859,901	27,999,915	1,859,986		6.64%
Current Liabilities	2,877,053	3,131,118	(254,065)		(8.11%)
Non-current Liabilities	1,361,874	1,384,733	(22,859)		(1.65%)
Total liabilities	4,238,927	4,515,851	(276,924)		(6.13%)
Capital	9,266,203	9,266,203	0		－
Capital reserve	180,533	147,446	33,087		22.44%	Note 1
Retained earnings (loss)	12,608,192	10,538,796	2,069,396		19.64%
Other equityitem	739,639	887,872	(148,233)	(16.70%)
TreasuryStock	(55,577)	(122,170)	(66,593)	(54.51%)		Note 2
Equities attribute to stockholder of the parent company	22,738,990	20,718,147	2,020,843		9.75%
Non-controlling interest	2,881,984	2,765,917	116,067		4.20%
Total equityamount	25,620,974	23,484,064	2,136,910		9.10%
Explain the relevant items, their increases or decrease variance more than 20% in						the last two
years (2018 and 2017) and their reasons:
Note 1. The capital reserve item is increase 22% from the last period. The main						reasons are
that the subsidiary disposed		the Company’s	shares and gained NT$28			million as
capital reserve	and that the subsidiary obtained cash dividends,				NT$3 million, from
the Company in this period as		capital reserve
Note 2. The treasure item is less than 55% from the			last period. The main reason is that the
subsidiary disposed the Company’s shares			and decreased	NT$66 million in this
period.
The future response plan: Not applicable.

Explain the relevant items, their increases or decrease variance more than 20% in the last two years (2018 and 2017) and their reasons:

Note 1. The capital reserve item is increase 22% from the last period. The main reasons are that the subsidiary disposed the Company’s shares and gained NT$28 million as capital reserve and that the subsidiary obtained cash dividends, NT$3 million, from the Company in this period as capital reserve
Note 2. The treasure item is less than 55% from the last period. The main reason is that the subsidiary disposed the Company’s shares and decreased NT$66 million in this period.

367

(II) Individual financial statement

Unit: New Taiwan Thousand Dollar

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Year Difference Explanation
2018 2017
Item Amount %
Current Assets 5,227,246 5,108,128 119,118 2.33%
Real estate, factory
6,600,827 6,909,116 (308,289) (4.46%)
and equipment
－
Intangible assets 0 0 0
Other assets 14,070,429 12,118,859 1,951,570 16.10%
Total assets 25,898,502 24,136,103 1,762,399 7.30%
Current Liabilities 2,115,208 2,363,192 (247,984) (10.49%)
Non-current
1,044,304 1,054,764 (10,460) (0.99%)
Liabilities
Total liabilities 3,159,512 3,417,956 (258,444) (7.56%)
－
Capital 9,266,203 9,266,203 0
Capital reserve 180,533 147,446 33,087 22.44% Note 1
Retained earnings
12,608,192 10,538,796 2,069,396 19.64%
(loss)
Other equity item 739,639 887,872 (148,233) (16.70%)
Treasury Stock (55,577) (122,170) (66,593) (54.51%) Note 2
Total equity amount 22,738,990 20,718,147 2,020,843 9.75%
----- End of picture text -----

Explain the relevant items, their increases or decrease variance more than 20% in the last two years (2018 and 2017) and their reasons:

Note 1. The capital reserve item is increase 22% from the last period. The main reasons are that the subsidiary disposed the Company’s shares and gained NT$28 million and that the subsidiary obtained cash dividends, NT$3 million, from the Company in this period.
Note 2. The treasure item is less than 55% from the last period. The main reason is that the subsidiary disposed the Company’s shares and decreased NT$66 million in this period.

The future response plan: Not applicable.

368

II. Financial performance: The main reasons for any material change in operating revenues, operating income, or income before tax during the past 2 fiscal years, provide a sales volume forecast and the basis therefor, and describe the effect upon the company’s financial operations as well as measures to be taken in response.

(I) The analysis table of operating result

1. Consolidated financial statements

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Unit: New Taiwan Thousand Dollar
Variance
Increase increase
Item 2018 2017 (decrease) (decrease) Note
amount Percentage
(%)
Net operating
24,741,138 23,350,965 1,390,173 5.95%
revenue
Operating cost (20,685,790) (19,556,980) 1,128,810 5.77%
Gross Operating
4,055,348 3,793,985 261,363 6.89%
Margin
Operating expenses (1,316,510) (1,310,168) 6,342 0.48%
Net Operating Profit 2,738,838 2,483,817 255,021 10.27%
Non-operating
Income and 1,318,110 1,699,258 (381,148) (22.43%) Note 1
Expenditure
Profit before tax 4,056,948 4,183,075 (126,127) (3.02%)
Income tax
(906,207) (735,425) 170,782 23.22%
(expense) gain
Profit after tax
3,150,741 3,447,650 (296,909) (8.61%)
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Note 1: The consolidate operating revenue and expense is less than 22% of it of last year. The main reasons are that the investment income from investment in the equity method is less than NT$560 million and that the exchange net income increase NT$130 million from last year.

369

2. Individual financial statement

Unit: New Taiwan Thousand Dollar

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Variance
Increase increase
Item 2018 2017 (decrease) (decrease) Note
Amount Percentage
(%)
Net operating revenue 20,305,094 18,931,639 1,373,455 7.25%
Operating cost (17,525,024) (16,315,485) 1,209,539 7.41%
Gross Operating
2,780,070 2,616,154 163,916 6.27%
Margin
Realized (unrealized)
8,574 13,608 (5,034) (36.99%) Note 1
gross marginal
Net Operating Margin 2,788,644 2,629,762 158,882 6.04%
Operating expenses (489,604) (464,239) 25,365 5.46%
Net Operating Profit 2,299,040 2,165,523 133,517 6.17%
Non-operating
Income and 1,336,317 1,607,803 (271,486) (16.89%)
Expenditure
Profit before tax 3,635,357 3,773,326 (137,969) (3.66%)
Income tax (expense)
(675,251) (484,684) 190,567 39.32%
gain
Profit after tax 2,960,106 3,288,642 (328,536) (9.99%)
----- End of picture text -----

Note 1: The reason of price difference between the unit selling price and the cost of the unit sold to the affiliates during this fiscal year is because that there is an unrealized sales profit of NT$ 4.74 million and the realized sales profit of NT$ 13.31 million in the previous year.

(II) The reason the change of the Company’s main business: Not applicable.

(III) Gross margin variance analysis

1. Consolidated financial statements

Unit: New Taiwan Thousand Dollar

2018 2017 Increase (decrease)	2018 2017 Increase (decrease)
Gross Operating Margin 4,055,348 3,793,985 261,363
Gross margin 16.39% 16.25% 0.86%
Explanation	The gross margin of this period increases 0.9% and the 2018 consolidated gross margin increase NT$261,363,000. The main reason is the gross margin of parent company, Grand Pacific Petrochemical Corporation,increases NT$163,916,000.

370

2. Individual financial statement

Unit: New Taiwan Thousand Dollar

==> picture [419 x 257] intentionally omitted <==

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

The difference reason
variance
oper increase Adjustment
ation
(decrease) Sales to
Gros number of price cost price complex Number unrealized
s previous difference difference difference difference gain(loss)
mar and current from sale
gin
period.
158,882 1,833,313 (1,590,644) (38,196) (40,557) (5,034)
The explanation of gross margin change:
The gross margin of this period is equivalent to the previous period, slightly
decrease 1%. The main reason is that the product prices slightly increase in
Expl
2018 and increase favor price difference around NT$1.8 billion. The cost of
anati
main raw material, Benzene, ethylene, acrylonitrile (AN), butadiene (BD),
on
hexamethylenediamine, adipic acid, etc., increase from the previous period and
cause unfavorable price difference around NT$1.6 billion. The gross margin in
this period
----- End of picture text -----

III. Cash flow: The analysis of cash flow changes during the most recent fiscal year, describe corrective measures to be taken in response to illiquidity, and provide a liquidity analysis for the coming year

(I) The analysis of cash flow change of the last fiscal year

1. Consolidated financial statements

Year Item 2018 2017 Increase(decrease) percentage
Cash flow ratio 159.06% 128.09% 24.18%
Cash flow adequacyratio 250.25% 243.69% 2.69%
Cash reinvestment ratio 9.27% 8.39% 10.49%
The analysis and explanation of change of ratio increase(decrease) percentage:
The cash flow ratio increased by 24% from the previous period. The main reason is the net cash
flow from operating activity increase 14% from the previous period and the current liability
decrease 8%from the previous period.

371

2. Individual financial statement

Year Item 2018 2017 Increase(decrease) percentage
Cash flow ratio 122.56% 95.71% 28.05%
Cash flow adequacyratio 158.54% 164.14% (3.41%)
Cash reinvestment ratio 4.87% 4.21% 15.68%
The analysis and explanation of change of ratio increase(decrease) percentage:
The cash flow ratio increases 28% from the last period. The main reason is that the cash flow in
operating activity increase 15% from the last period and the current liability decrease 10% from
the last period.

(II) The 2018 cash liquidity analysis

1. Consolidated financial statements

Unit: New Taiwan thousand dollars

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

The remedial
Comes from operation in Cash in the Cash
measure of cash
Cash balance at the the whole year whole year balance
shortage
beginning of the period
Net cash flow in from flow out (shortage) Investment Financial
activity amount amount plan plan
－－
2,122,753 4,576,355 3,969,654 2,729,454
1. The cash flow change and its analysis of this fiscal year.
(1) Operating activities: Cash inflows from operating activities are primarily cash inflows arising
from profit from operation.
(2) Investing activities: The net cash outflow from investing activities is mainly for the acquisition
of fixed assets and investment in other financial assets.
(3) Fund raising activities: The net cash outflow from fund raising activities is mainly the
distribution of cash dividends.
2. The remedial measure of cash shortage and liquidity analysis: None.
3. The cash liquidity analysis of the coming year:
The remedial
Estimate to come from Estimate the The cash
measure of cash
The cash balance at the operation in the whole year whole year balance
shortage
end of period
Net cash flow in from Investment Financial
Cash outflow [(shortage) ]
activity amount plan plan
----- End of picture text -----

The cash balance at the end of period	Estimate to come from operation in the whole year Net cash flow in from activity	Estimate the whole year Cash outflow	The cash balance (shortage) amount	The remedial measure of cash shortage Investment plan Financial plan
2,729,454	2,000,000	2,729,454	2,000,000	－－

372

2. Individual financial statement

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

Unit: New Taiwan thousand dollars
The remedial
Comes from operation in Cash in the Cash
measure of cash
Cash balance at the the whole year whole year balance
shortage
beginning of the period
Net cash flow in from flow out (shortage) Investment Financial
activity amount amount plan plan
－－
1,134,630 2,592,394 2,159,349 1,567,675
1. The cash flow change and its analysis of this fiscal year:
(1) Operating activities: Cash inflows from operating activities are primarily cash inflows arising
from profit from operation.
(2) Investment activities: The net cash outflow from investing activities is mainly the investment in
the acquisition of fixed assets and the investment in the equity method.
(3) Fund raising activities: The net cash outflow from fund raising activities is mainly the
distribution of cash dividends.
2. The remedial measure of cash shortage and the liquidity analysis: None.
3. The cash liquidity analysis of the coming year:
The remedial
Estimate to come from Estimate the The cash
measure of cash
The cash balance at the operation in the whole year whole year balance
shortage
end of period
Net cash flow in from Investment Financial
Cash outflow [(shortage) ]
activity amount plan plan
----- End of picture text -----

The cash balance at the end of period	Estimate to come from operation in the whole year Net cash flow in from activity	Estimate the whole year Cash outflow	The cash balance (shortage) amount	The remedial measure of cash shortage Investment plan Financial plan
1,567,675	1,108,645	147,003	2,529,317	－－

IV. The effect upon financial operations of any major capital expenditures during the most recent fiscal year:

There is no major capital expenditures in 2018.

373

V. The Company’s reinvestment policy for the most recent fiscal year, the main reasons for the profits/losses generated thereby, the plan for improving re-investment profitability, and investment plans for the coming year:

V. The Company’s reinvestment policy for the most recent fiscal year, the main reasons for the profits/losses generated thereby, the plan for improving re-investment profitability, and investment plans for the coming year:	V. The Company’s reinvestment policy for the most recent fiscal year, the main reasons for the profits/losses generated thereby, the plan for improving re-investment profitability, and investment plans for the coming year:	V. The Company’s reinvestment policy for the most recent fiscal year, the main reasons for the profits/losses generated thereby, the plan for improving re-investment profitability, and investment plans for the coming year:	V. The Company’s reinvestment policy for the most recent fiscal year, the main reasons for the profits/losses generated thereby, the plan for improving re-investment profitability, and investment plans for the coming year:	V. The Company’s reinvestment policy for the most recent fiscal year, the main reasons for the profits/losses generated thereby, the plan for improving re-investment profitability, and investment plans for the coming year:	V. The Company’s reinvestment policy for the most recent fiscal year, the main reasons for the profits/losses generated thereby, the plan for improving re-investment profitability, and investment plans for the coming year:
Item/explanation Capital Policy The main reason of profit or loss Improv ement plan Future investment plan
Land and Sea Capital Corp. US$ 86,318,976 In according to the operation policy of the board of directors, invest in China area. The 2018 investment gain is NT$ 905,766,000, through the company to reinvest 30.4% shareholding percentage of Zhenjiang Chimei Chemical Company Limited. None None
GPPC CHEMICAL CORPORATION NT$542,000,000 Manufacture, processing and sale of Impact polystyrene. The 2018 investment gain is NT$ 41,408,000 and the main reason is dividends from reinvested company. None None
Videoland Inc.	NT$1,141,324,000	General import and export trade, radio and television program production, domestic and foreign film copy, and production, distribution, trading and other services of domestic movie.	The 2018 investment gain is NT$250,259,000 and the main reason is business profit.	None	None

IV. Risk assessment and analysis

(I) Impacts to the income and loss of the Company from changes of interest rates, foreign exchange rates, and inflation, and the countermeasures

Interest rate, exchange change and inflation.

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

Unit: New Taiwan thousand dollars
Year 2018
Item (Consolidated financial statement
basis)
Net operating revenue 24,741,138
Profit before tax 4,056,948
Net exchange gains(losses) 91,458
Net exchange gains(losses) to net sales revenue 0.37%
Net exchange gains(losses) to profit before tax 2.25%
Interest income 67,249
Interest income to net sales revenue 0.27%
Interest income to profit before tax 1.66%
Interest Expense 1,835
Interest expense to net sales revenue 0.01%
Interest expense to profit before tax 0.04%
----- End of picture text -----

374

(1) Exchange rate changes

The 2018 foreign exchange gains of GPPC and its affiliates accounts for 0.37% of net operating income and 2.25% of profit before tax. The main reason is the depreciation of New Taiwan Dollar in 2018. Generally speaking, the foreign exchange income and foreign exchange expenditure of the Group are balanced. However, the Group will continue to assess foreign exchange risk and enter into forward foreign exchange trading contracts as needed to avoid foreign currency exchange rate risk.

(2) Interest rate change

As of the end of 2018, GPPC and its affiliates has no bank loans. However, the Group still maintain a close contact with the banks for future needs. Besides, the Company reduces the average capital cost by establishing multi-funding channels. The 2018 annual interest expenses are NT$ 1,835,000, only accounting 0.01% of net sales revenue and 0.04% of the profit before tax.

(3) Inflation

According to the price statistics report of the Chief Executive Office of the Executive Yuan, consumer price index (100) calculated based on the base year of 2016, the 2018 consumer price index is 101.98, compares to 2017 consumer price index 100.62, the increase is slight.

Domestic prices are stable in 2018 and the Company’s operation is not affected by inflation.

2. Future response measure

(1) The financial department maintains close contact with the foreign exchange departments in various financial institutions and collects information about exchange rate changes at any time. The financial department fully grasp the domestic and international exchange rate trends and changes in information, continues to assess foreign exchange risk and enter into forward foreign exchange trading contracts as needed to avoid foreign currency exchange rate risk
(2) The Company not only maintains a close contact with banks to obtain preferential loan interest rates, but also reduces average capital cost by establishing multi-funding channels.
(3) Slow inflation is a sign of healthy economic growth. At this time, the cost of the Company is easy to pass and the product has more profit margins. It is good for the Company. Whereas, if it is rapid inflation, it might cause consumers to reduce their purchasing willingness and hare do pass cost. It is not good to the Company.

375

Now, the Company does not have the need to formulate the necessary measures to cope with inflation.

(II) The Company’s policy regarding high-risk investments, highly leveraged investments, loans to other parties, endorsements, guarantees, and derivatives transactions; the main reasons for the profits/losses generated thereby; and response measures to be taken in the future.
In 2018, the Company does not engage in high-risk, highly leveraged investment transactions for derivatives
In 2018, the endorsement and warranty balance of the company, KK ENTERPRISE CO., LTD., to its subsidiary KK ENTERPRISE (Malysia) CO., LTD., is as following:

The highest balance of endorsement and guaranty	The balance of endorsement and guaranty at the end of theperiod	The actual expenditure
MYR$8,940,000	MYR$8,940,000	MYR$5,940,000

In 2018, the Company does not loans funds to others.

(III) Future R&D plans and estimated investment in R&D expenditure

==> picture [524 x 72] intentionally omitted <==

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

Should be The
further estimation
The R&D plan in the last fiscal Current Future R&D can success
invest completion
year status The main influential factors
R&D Research
expenses time
----- End of picture text -----

1. Technology development of agglomerated PBL large particle latex 2. Development, research and manufacture at the level of high-heeled shoes grade 3. Nylon 66 compound material trial sale development 4. Development of heat-resistant super tough nylon 66 5. Electroplating level, tube ABS quality improvement 6. Improve ABS background color and dyeing quality 7. Planning nylon 66 compound blending plant	Pilot testing Material testing Material testing Material testing Material testing Optimization Planning	1 Million 1Million 3 Million 2 Million 1 Million 1 Million 3 Million	August, 2019 August, 2019 October, 2019 August, 2019 June, 2019 May, 2019 October, 2019	1. Break through the technological bottleneck 2. Successfully develop markets 3. Mass production economy scale is competitive 4. High value and uniqueness 5. No negative impact on the environment

376

(IV) Effect on the Company’s financial operations of important policies adopted and changes in the legal environment at home and abroad, and measures to be taken in response.

The Company always pays close attention to the development of political and economic situation, major policy formulation and legal changes at home and abord. The Company arranges professionals to accept internal and external training courses as needed. In 2018, there are no important policies and laws at home and abroad change that have a significant impact on the financial business of the Company.

(V) Effect on the Company’s financial operations of developments in science and technology as well as industrial change, and measures to be taken in response

The Company always pays attention to the relevant technological changes in the industry. The Company appoints dedicate personnel to assess and research the technological changes to understand its effect on the Company’s future development and financial operation, and takes the related measures required. In recent years, there is no important technological change that would have significant effect on the Company’s financial operation.

(VI) Effect on the company’s crisis management of changes in the company’s corporate image, and measures to be taken in response: None.
(VII) Expected benefits and possible risks associated with any merger and acquisitions, and mitigation measures being or to be taken: Not applicable.
(VIII) Expected benefits and possible risks associated with any plant expansion, and mitigation measures being or to be taken: None.
(IX) Risks associated with any consolidation of sales or purchasing operations, and mitigation measures being or to be taken: Not applicable.
(X) Effect upon and risk to the Company in the event a major quantity of shares belonging to a director, supervisor, or shareholder holding greater than a 10 percent stake in the company has been transferred or has otherwise changed hands, and mitigation measures being or to be taken: Not applicable.
(XI) Effect upon and risk to Company associated with any change in governance personnel or top management, and mitigation measures being or to be taken: Not applicable.
(XII) There has been any substantial impact upon shareholders’ equity or prices for the Company’s securities as a result of any litigation, or non-litigious proceeding involving a Company director, supervisor, general manager, de facto responsible person, or major shareholder with a stake of more than 10

377

percent, and the matter was finalized or remained pending up to the printing date of the prospectus: None.

(XIII) Other important risks, and mitigation measures being or to be taken: Not applicable.

VII. Other important matters: Not applicable.

378

Eight. Special items to be included

I. Relevant information about affiliates

(I) Detail list of the long-term shareholding percentage (December 31, 2018)

Grand Pacific Petrochemical Corporation

==> picture [466 x 298] intentionally omitted <==

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

GPPC Land & Sea GOLDENPACI GPPC VIDEOLAND KK
CHEMICAL FIC EQUITIES LTD. Investment Corp. Inc ENTERPRISE CO.,
CORPORATION Capital Corp. LTD.
Zhenjiang Zhangzhou GPPC KK
CHIMEI CHIMEI Hospitality Chemical
Chemical Chemical and Leisure Co. Ltd.
Co. Ltd. Co. Ltd.
Inc.
KK
ENTERPRISE(ZHO
NGSHAN) CO.,LTD
KK ENTERPRISE
（KUNSHAN）
CO.,LTD.
Dragon
King Inc.
KK
ENTERPRIS
E (Malaysia)
CO., LTD.
----- End of picture text -----

379

(II) The name, date of establishment, address, paid-in capital and main business items of the relational enterprise:

==> picture [468 x 673] intentionally omitted <==

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

Unit: NT$/US thousand dollars
Paid-in Main business and
Company Name [Incorporation ] Address
date capital size manufacture item
GPPC CHEMICAL 20 July, 1987 No. 66, 542,000 1.Synthetic Resin & Plastic
Manufacturing
CORPORATION Changxing Rd.,
2. International trade
Luzhu Dist., 3. All business items that are not
Kaohsiung City prohibited or restricted by law,
except those that are subject to
special approval
GPPC Investment 3 January, 10F No. 1, Sec. 270,000 1. Provide investment business
to venture capital business
Corp. 1997 4, Nanjing E.
2. Provide planning, consulting,
Rd., Songshan
participating in operation, and
Dist., Taipei City management to venture capital
business
3. Provide business operation,
management, and consulting
to other venture capital
business
4. Other related business
approved by the competent
authority
GPPC Hospitality 12 October, 1F No. 26, Ln. 40,000 1. Coffee/Tea Shops and Bars
2. Public Houses and Beer Halls
and Leisure Inc. 2018 295, Sec. 1,
3. Restaurants
Dunhua S. Rd., 4. All business items that are not
Da’an Dist., prohibited or restricted by law,
Taipei City except those that are subject to
special approval
GOLDENPACIFIC 5 May, 2006 [Flemming House ] US$75 Reinvest in various businesses
EQUITIES LTD. Wickham’s Cay outside Taiwan area in
Road Town accordance with the parent
Tortola BVI company’s operating policies.
Land & Sea 4 December, Wickham’s Cay US$103,266 [Reinvest in various businesses]
Road Town outside Taiwan area in
Capital Corp. 2002
Tortola BVI accordance with the parent
company’s operating policies.
Videoland Inc. 2 Feburary, No. 480-3, 1,141,324 Radio and television production
1982 Ruiguang Rd.,
Neihu Dist.,
Taipei City
Videoland Holding 2 June, 2016 30 de Castro St. US$10,000 Reinvestment Business
Ltd. Wickham’s Cay1
RoadTown
Tortola BVI
KK ENTERPRISE 15 April, 1975 No. 1, Ziqiang 630,531 Manufacture, wholesale, retail of
label paper, release paper, all
CO., LTD. 3rd RD., Nantou
kinds of adhesive tape, tape and
City, Nantou
synthetic resin.
County
Zhenjiang Chimei 12 March, No. 18, Hanfeng US$358,850 [Manufacturing, sales and ]
processing of styrene-based
----- End of picture text -----

380

==> picture [467 x 501] intentionally omitted <==

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

Chemical Co. Ltd. 1996 Road, Zhenjiang products: manufacturing and
sales of ABS, AN, PS, etc. and
New District,
storage and transportation of raw
Zhenjiang City,
materials, etc.
Jiangsu Province
Zhangzhou Chimei 9 August, No. SY14, CNY$880,000 [Primary plastic and synthetic ]
resin manufacturing
Chemical Co. Ltd. 2018 A-14-2 Area,
Seaside City,
Zhangzhou City,
Fujian Province
KK Chemical Co. 5 March, 1991 ROOM HKD2,500 Reinvestment Business
Ltd. 1608-1609
City Plaza , 1-17
Sai Lau Kok
Road,Tsuen
Wan,N.T.,
KK ENTERPRISE 2 November, No. 81, East HKD12,300 Label paper, release paper and
(Zhongshan )CO. 1991 Jucheng Avenue, tape business
LTD. Xiaolan Town,
Zhongshan City,
Guangdong
Province
KK ENTERPRISE 3 December, No. 568 US$6,100 Label paper, release paper and
(Kunshan) 2001 Gucheng Road, tape business
CO. ,LTD. Bacheng Town,
Kunshan City,
Jiangsu Province
KK ENTERPRISE 9 November, 2576 LRG. RM2,400 Label paper, release paper and
(Malaysia) CO., 2007 PERUSAHAAN tape business
LTD. 10, PRAI IND.
EST.,
13600,PRAI
PENANG,
MALAYSIA.
Dragon King Inc. 9 February, PORTCULLIS US$100 Reinvestment Business
2006 TRUSTNET
CHAMBERS,
P.O.BOX
1225,APIA,
SAMOA
----- End of picture text -----

(III) Presumed to be control and affiliation

The Company is not being deemed to have control and subordinate relationship under Article 369-3 of Company Act.

(IV) The overall relationship between the industries covered by the company

==> picture [463 x 116] intentionally omitted <==

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

business
Affiliates Operating industry
division
Synthetic resin and plastics manufacturing,
international trade, all business items that are not
GPPC Chemical Corporation None
prohibited or restricted by law, except those that are
subject to special approval. .
Reinvest in various businesses in the Taiwan area in
GPPC Investment Co., Ltd. accordance with the parent company’s operating None
policies.
GPPC Hospitality and Leisure Catering None
----- End of picture text -----

381

==> picture [463 x 283] intentionally omitted <==

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

Inc.
Reinvest in various businesses outside Taiwan area in
GOLDENPACIFIC
accordance with the parent company’s operating None
EQUITIES LTD.
policies.
Reinvest Zhenjiang Chimei Chemical Company
Land & Sea Capital Corp. None
Limited
Videoland Inc. Radio and television production None
Videoland Holding Ltd. Investment None
Manufacture, wholesale, retail of label paper, release
KK ENTERPRISE CO., LTD. paper, all kinds of adhesive tape, tape and synthetic None
resin
Zhenjiang Chimei Chemical Manufacturing, sales and processing of styrene-based
Co. Ltd. products: manufacturing and sales of ABS, AN, PS,
None
etc. and storage and transportation of raw materials,
etc.
Zhangzhou Chimei Chemical Primary plastic and synthetic resin manufacturing
None
Co. Ltd.
KK Chemical Co. Ltd. Investment None
KK ENTERPRISE Label paper, release paper, various types of adhesive None
(Zhongshan )CO. LTD. tape, tape and synthetic resin
KK ENTERPRISE Label paper, release paper, various types of adhesive None
(Kunshan) CO. ,LTD. tape, tape and synthetic resin
KK ENTERPRISE (Malaysia) Label paper, release paper, various types of adhesive None
CO., LTD. tape, tape and synthetic resin
Dragon King Inc. Investment None
----- End of picture text -----

(V) Information of Directors, Supervisors, and General Managers of Each Affiliates.

Unit: Share; %

==> picture [469 x 363] intentionally omitted <==

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

Shares
Company Name Position Name or Representative Share number Percentage Note
.
GPPC Chemical Chairman YANG,PIN-CHENG 54,200,000 hares 100% Representative of
Corporation Directors TSENG,CHIA-HSIUNG 54,200,000 hares 100% Grand Pacific
Directors LIANG,JEN-CHIEH 54,200,000 hares 100% Petrochemical
Supervisor HUANG,HSI-HUI 54,200,000 hares 100% Corporation
G e n e r a l LIANG,JEN-CHIEH －－－
m a n a g e r
GPPC Chairman HUANG,HSI-HUI 22,032,000 hares 81.6% Representative of
Investment Co., Directors YANG,PIN-CHENG 22,032,000 hares 81.6% Grand Pacific
Ltd. Directors CHOU,CHEN-MING 22,032,000 hares 81.6% Petrochemical
Supervisor CHEN,CHING-FU 22,032,000 hares 81.6% Corporation
G e n e r a l HUANG,HSI-HUI －－－
m a n a g e r
GPPC Chairman H U A N G , H S I - H U I 4,000,000 shares 100% The
Hospitality and Directors C H E N , L I N G - C H U 4,000,000 shares 100% representative of
Leisure Inc. Directors S H E N , M E I - Y U 4,000,000 shares 100% GPPC Investment
Supervisor C H E N , C H I N G - F U 4,000,000 shares 100% Co., Ltd.
GOLDENPACIF Chairman HUANG,HSI-HUI 100% Representative of
IC EQUITIES Directors YANG,PIN-CHENG 100% Grand Pacific
LTD. Petrochemical
Directors CHOU,CHEN-MING 100%
Corporation
Land and Sea Chairman KU,CHUNG-YING 100% Representative of
Capital Corp. Directors YANG,PIN-CHENG 100% Grand Pacific
Petrochemical
Directors HUANG,HSI-HUI 100%
Corporation
Videoland Inc. Chairman WANG,CHUN 3,955,000 shares 3.47% Representative of
----- End of picture text -----

382

==> picture [469 x 693] intentionally omitted <==

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

Shares
Company Name Position Name or Representative Share number Percentage Note
.
Directors CHENG,TZU-YI 3,955,000 shares 3.47% Zhen He Co., Ltd.
71,093,494
Directors YANG,PIN-CHENG 62.29%
shares Representative of
71,093,494 Grand Pacific
Directors HUANG,HSI-HUI 62.29%
shares Petrochemical
71,093,494 Corporation
Directors CHEN,CHING-FU 62.29%
shares
Supervisor WANG,SUNG-CHOU 1,130,197 shares 0.99% Representative of
Supervisor CHANG,SU-CHU 1,130,197 shares 0.99% Hong Fu Limited
G e n e r a l －－－
CHENG,TZU-YI
m a n a g e r
Videoland Directors WANG,KE-CHIEH 100%
Holding Ltd. Directors CHENG,TZU-YI 100% Representative of
Videoland Inc.
Directors HUANG,HSI-HUI 100%
Zhenjiang Chairman CHAO,LING-YU US$249,760
Chimei V i c e
YIN,YUNG-HSIANG US$249,760
Chemical Co. chairman
Representative of
Ltd. Executive
CHAO,CHIEN-JEN US$249,760 JENTRA
d i r e c t o r
INVESTMENT
Concurrent 69.6%
LIMITED
serves as
LIABILITY
d i r e c t o r HUNG,LIANG-YI US$249,760
COMPANY
G e n e r a l
m a n a g e r
Directors CHEN,HSI-FU US$249,760
Directors YANG,PIN-CHENG US$109,090 Representative of
30.4% Land & Sea
Directors CHOU,CHEN-MING US$109,090
Capital Corp.
Representative of
JENTRA
INVESTMENT
Supervisor YEN,CHIEH-PIN US$249,760 69.6%
LIMITED
LIABILITY
COMPANY
Representative of
Supervisor HUANG,HSI-HUI US$109,090 30.4% Land & Sea
Capital Corp.
Zhangzhou Chairman CHAO,CHIEN-JEN CNY$367,488
Chimei Directors CHAO,LING-YU CNY$367,488
Chemical Co. Concurrent
Ltd.
serves as
Jumping Holding
director SU,YAO-TSUNG CNY$367,488 69.6% Co. Ltd.(Samoa)
G e n e r a l
m a n a g e r
Directors HUNG,LIANG-YI CNY$367,488
Directors MA,KUEI-KUAN CNY$367,488
Directors TSENG,CHIA-HSIUNG CNY$160,512 Representative of
30.4% Land and Sea
Directors LIN,WEN-HUI CNY$160,512
Capital Corp.
Jumping Holding
Supervisor LIN,PI-CHI CNY$367,488 69.6%
Co. Ltd.(Samoa)
----- End of picture text -----

383

==> picture [469 x 680] intentionally omitted <==

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

Shares
Company Name Position Name or Representative Share number Percentage Note
.
Representative of
Supervisor CHEN,CHING-FU CNY$160,512 30.4% Land and Sea
Capital Corp.
KK Chairman YEN,PO-YING 9,917,954 shares 15.73% Representative of
ENTERPRISE Grand Pacific
CO., LTD. D i r e c t o r YANG,PIN-CHENG 9,917,954 shares 15.73% Petrochemical
Corporation
21,307,103
Directors HUANG,HSI-HUI 33.79%
shares Representative of
21,307,103 Videoland Inc.
Directors CHEN,PENG-WEN 33.79%
shares
Directors LI,FU-MEI 1,208,910 shares 1.9%
Directors CHEN,LI-CHIN-HUA 3,282,042 shares 5.21%
Directors LI,FU-MEI 1,208,910 shares 1.92%
Directors CHEN,SHU-HUA 471,199 shares 0.75%
Representative of
Zhong Guan
Supervisor WANG,SUNG-CHOU 34,602 shares 0.05%
Investment Co.,
Ltd.
Supervisor LI,YING-HUNG 464,650 shares 0.74%
G e n e r a l －－－
CHEN,PENG-WEN
m a n a g e r
KK CHEMICAL Chairman YEN,PO-YING HK$1,247 Representative of
CO. LTD. KK
49.9%
Directors WANG,JUI-FA HK$1,247 ENTERPRISE
CO., LTD.
KK Chairman YEN,PO-YING HK$6,150
ENTERPRISE Directors CHEN,PENG-WEN HK$6,150
(Zhongshan )CO Directors CHOU,YUNG-NAN HK$6,150 Representative of
KK
.LTD. Directors WANG,JUI-FA HK$6,150 50%
ENTERPRISE
Directors CHEN,TSUNG-MIN HK$6,150
CO., LTD.
G e n e r a l
WANG,JUI-FA HK$6,150
m a n a g e r
KK Chairman YEN,PO-YING US$ 6,100
ENTERPRISE( Directors CHEN,PENG-WEN US$ 6,100
Kunshan) Directors CHOU,YUNG-NAN US$ 6,100 Representative of
CO. ,LTD. Directors WANG,JUI-FA US$ 6,100 KK
100%
Directors YANG,WEI-CHUNG US$ 6,100 ENTERPRISE
Supervisor LAN,MEI-LI US$ 6,100 CO., LTD.
G e n e r a l US$ 6,100
WANG,JUI-FA
m a n a g e r
KK Chairman YEN,PO-YING MYR$1,680 Representative of
ENTERPRISE Directors CHEN,PENG-WEN MYR$1,680 KK
70%
(Malaysia) CO., Directors LAN,MEI-LI MYR$1,680 ENTERPRISE
LTD. Directors TSAI,CHIH-FAN MYR$1,680 CO., LTD.
Directors HUANG,PING-CHANG MYR$720 Representative of
Directors LI,MING-TAI MYR$720 CHAILEASE
MYR$720 30% RESOURCES
Directors LIU,CHIA-CHENG TECHNOLOGY
CO., LTD.
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384

Company Name Position Name or Representative Share number Shares Percentage . Note	Company Name Position Name or Representative Share number Shares Percentage . Note	Company Name Position Name or Representative Share number Shares Percentage . Note	Company Name Position Name or Representative Share number Shares Percentage . Note	Company Name Position Name or Representative Share number Shares Percentage . Note	Company Name Position Name or Representative Share number Shares Percentage . Note
Dragon King Inc.	Chairman	YEN,PO-YING	US$ 100	100%	Representative of KK ENTERPRISE CO.,LTD.

(VI) The overview of the operations of the affiliates

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Unit: New Taiwan thousand dollars
Paid-in Profit/loss of Earnings
capital Total Operating Operating this term per share
Company Name Total assets
liabilities [New Value] revenues margin (Dollar)
(Capital) (After Tax)
(After Tax)
GPPC Chemical
Corporation 542,000 780,523 41,803 738,720 1,467,327 4,182 45,813 0.85
GPPC Investment
Corp. 270,000 333,001 92 332,909 9,792 (6,719) (6,726) (0.25)
GOLDENPACIFIC
EQUITIES LTD. 2,312 682,147 1,830 680,317 11,166 10,806 10,806 0.00
Videoland Inc. 1,141,324 6,474,254 464,834 6,009,420 2,299,327 356,703 401,764 3.52
KK ENTERPRISE
CO., LTD. 630,531 1,328,828 298,641 1,030,187 962,101 40,493 54,723 0.87
Land and Sea
Capital Corp. 1,870,475 7,711,795 1,427 7,710,368 1,015,283 920,064 920,064 0.00
KK Chemical Co.
Ltd. 9,803 57,129 48,282 8,847 0 (149) (143) 0.00
Zhongshan KK
Adhesion Product
Corporation 48,228 207,682 64,512 143,170 446,362 18,642 15,570 0.00
Kunshan KK
Adhesion Product
Corporation 187,362 251,938 40,069 211,869 271,385 3,085 3,011 0.00
KK ENTERPRISE
(Malaysia) CO.,
LTD. 17,069 96,686 25,657 71,029 172,584 16,184 12,645 0.00
Dragon King Inc. 3,072 4,759 0 4,759 245 (44) (44) 0.00
Zhenjiang Chimei
Chemical Co. Ltd. 11,022,078 36,130,161 15,344,042 20,786,119 72,921,032 4,344,039 3,251,366 0.00
GPPC Hospitality
and Leisure Inc. 40,000 44,385 4,799 39,586 0 (437) (414) (0.10)
----- End of picture text -----

Note: If the affiliate is a foreign company, relevant number should be converted into New Taiwan Dollar, at the exchange rate of the statement, and list in New Taiwan Dollar.

II. Where the Company has carried out a private placement of securities during the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report: None.

385

III. Holding or disposal of shares in the Company by the Company’s subsidiaries during the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report:

Unit: New Taiwan thousand dollars; thousand shares; %

Unit: New Taiwan thousand dollars;thousand shares;%	Unit: New Taiwan thousand dollars;thousand shares;%	Unit: New Taiwan thousand dollars;thousand shares;%	Unit: New Taiwan thousand dollars;thousand shares;%	Unit: New Taiwan thousand dollars;thousand shares;%	Unit: New Taiwan thousand dollars;thousand shares;%	Unit: New Taiwan thousand dollars;thousand shares;%	Unit: New Taiwan thousand dollars;thousand shares;%	Unit: New Taiwan thousand dollars;thousand shares;%	Unit: New Taiwan thousand dollars;thousand shares;%	Unit: New Taiwan thousand dollars;thousand shares;%	Unit: New Taiwan thousand dollars;thousand shares;%
Name of subsidiary Paid-in capital size The source of funds The shareho lding percent age of the Compa ny The date of share acquisitio n and disposal The shares and amount of acquired shares The shares and amount of disposed shares Profits or losses from investments The holding shares number and amount as of 16, April, 2018 The lien status The Company’s endorseme nt and guaranty amount to its subsidiary The Company loans funds to its subsidiary. Amount
GPPC CHEMICAL CORPORATION	542,000	Proprietary funds	100.00	From 18 April,2018 to 31 May, 2018 ~ May 31, 218	0	2,881,000 shares NT$ 94,859,000	NT$ 28,267,000	Common stock of GPPC 247,000 shares NT$ 5,965,000 Preferred stock of GPPC 1,776,000 shares NT$ 65,978,000	0	0	0

IV. Other matters that require additional description: None.

Nine. If any of the situations which might materially affect shareholders’ equity or the price of the Company’s securities, has occurred during the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report, such situations shall be listed one by one: None.

386

AI assistant

GPPC — Annual Report 2018

51770_rns_2019-07-03_ab3eb399-4c85-42d3-85bc-0eb4cf2dea5a.pdf

2018

Annual report

I. The name, title, telephone number, and e-mail address of the spokesman or acting spokesman

II. The address and telephone number of the Company’s headquarters, branch offices, and factories

III. The name, address, e-mail address, and telephone number of the agency handling shares transfer

IV. The name of the certified public accountant who duly audited the annual financial report for the most recent fiscal year, and the name, address, telephone number and website of said person’s accounting firm.

The quality policy of GPPC

1. Table of content

One. A report to the shareholders

I. 2018 business report:

II. The brief of 2018 business plan:

1. Styrene Monomer(SM)

4. Steam and electricity

5. Nylon (PA)

III. The Company’s future prospect:

IV. External competition environment, regulatory environment and overall business environment impact:

Two. A company profile

I. Incorporation date: 25 September, 1973

II. Historical Highlights

Three. A corporate governance report.

I. Organizational system:

(I) Organization System Chart

(II) The business of main department

II. Information on the company’s directors, president, senior vice president, vice president, and the supervisors of all the company’s divisions and branch units.

Major shareholder of juristic person shareholder

If the shareholder is juristic person, its major shareholders.

Information on the Company’s directors (2)

III. Remuneration paid during the most recent fiscal year to directors, the general manager, and assistant general managers

Remuneration range table

(3-2) Remuneration of general manager and assistant general manager (aggregate remuneration information, with the name(s) indicated for each remuneration range)

(I) The name and distribution status of manager’s employee remuneration

IV. Company governance:

(I) The operation of board of director

Any other matters that require reporting:

(II) The implementation of audit committee

The training of directors:

(IV) The composition, authority and responsibility of remuneration committee:

(1) the member of remuneration committee:

(2) The authority and responsibility of remuneration committee

I. Regularly review this organization and provide revision suggestion.

II. The term of current member: form 27 June, 2017 to 26 June, 2010. There are four meetings in the latest fiscal year and the qualification and attendance of the members are as below:

Note:

(V) The implementation of corporate social responsibility

(VI) The enforcement and implementation measure of ethical corporate management of the Company: Implementation of faith business

(VIII) It may be disclosed if there is any other important information which is helpful to under the implementation of corporate governance of the Company:

2. The Company’s operation process of internal major information

(IX) The implementation of internal control

1. Internal Control System Statement

Internal Control System Statement of public company Representation that both design and implementation is effective.

2. The content and implementation of material resolution in 2017 shareholders

meeting:

V. Information on CPA professional fees:

IV. Information on replacement of certified public accountant: None.

(I) The shareholding changes of common stock

(II) The shareholding changes of preferred stock

IX. Relationship information, if among the company’s 10 largest shareholders any one is a related party or a relative within the second degree of kinship of another:

Four. Information on capital raising activities

I. Capital and shares

(I) Source of share capital

(II) Structure of Shareholders

1. Common stock

2. Preferred stock

(III) Distribution of Equity Interests Diffusion of ownership

1. Common stock

2. Preferred stock

(V) Information of market value, net value, earnings and dividends per share

1. The dividends policy of the Company’s article of incorporation:

2. Implementation status

II. Corporate bonds: The Company does not issue corporate bonds.

III. Preferred stock:

Five. Business Overall

I. The content of business:

2. The business ratio of each product:

(1) GPPC group

(2) The Company’s individual financial statements.

3. The current product(service) of GPPC group:

(6)

GPPC Annual Report 2018