NK - Annual Report 2020 | FinancialReports.eu

Stock Code：2101

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Nankang Rubber Tire CORP., LTD.

2020 Annual Report

Notice to readers

This English-version annual report is a summary translation of the Chinese version and is not an official document of the shareholders’ meeting. If there is any discrepancy between the English and Chinese versions, the Chinese version shall prevail.

Taiwan Stock Exchange Market Observation Post System: http://newmops.twse.com.tw Annual Report is available at: http://www.nankang-tyre.com/index.php?lang=zhTW&active=Investors#0 Printed on April 4, 2021

Person-in-charge Chairman: Zhang, Chang-Ping President: Zhan, Cai-Yun Spokesperson Name: Guo, Mei-Hang Title: Financial manager Tel: 02-27071000 E-mail: [email protected] Deputy Spokesperson Name: Deng, Cheng-Hua Title: Special Assistant to President Tel: 02-27071000 E-mail ： [email protected] Stock Transfer Agent Yuanta Securities Address: B1F., No.210, Sec. 3, Chengde Rd., Datong Dist., Taipei City 103432, Taiwan (R.O.C.) Tel: 02-2586-5859 Website: www.yuanta.com.tw Auditors Accounting firm: Baker Tilly Clock & Co Auditors: Ying-Lai Chou, Kuo-Fu Tseng Address: 14F., No.111, Sec. 2, Nanjing E. Rd., Zhongshan Dist., Taipei City 104475, Taiwan (R.O.C.) Tel: 02-2516-5255 Website: www.clockcpa.com.tw Overseas Securities Exchange None Corporate Website http://www.nankang-tyre.com Headquarters, Factory and Plant Headquarters Address: Rm. 608, 6F., No.136, Sec. 3, Ren'ai Rd., Da’an Dist., Taipei City 106465, Taiwan (R.O.C.) Tel: 02-2707-1000 Xin-Feng Plant Address: No.399, Xinxing Rd., Xinfeng Township, Hsinchu County 304114, Taiwan (R.O.C.) Website: 03-559-2102

I. Letter to Shareholders

Dear Shareholders,

Looking back on 2020, although the impact of COVID-19 has led to the first and second quarter revenue positions, fortunately, the short-term trough has allowed us to re-examine the operating plan, and with the advancement of the operating level, through the adjustment of production capacity to reduce fixed expenditures , Actively develop new markets and customer sources... and other methods continue to move forward, and even delivered the highest revenue growth of nearly 16% over the same period last year in the third quarter. In some respects, thanks to the decline in raw material prices last year and the development of new products and markets, Nankang Tire remains sufficiently competitive among its peers.

Nevertheless, by the end of 2020, the U.S. Department of Commerce announced that it will target four Asian countries (Thailand, Vietnam, South Korea, Taiwan) conducted dual anti-dumping investigations (anti-dumping, countervailing), although the initial tax rate is not conducive to Taiwanese companies, but Nankang is currently adjusting the sales market and accelerating the development of electric tires and other high-value products, reducing its combat effectiveness.

The company has faced challenges again and again from the industrial transformation, the downturn in the general environment to the reorganization of the global economic competition and the market order. It continues to reform and innovate with the persistence of "professional, precise, and in-depth", and responds to a number of business strategies:(1) In-depth integration of production and sales departments, (2) Continue to strictly control various procurement costs, (3) Actively deploy physical and online marketing channels, (4) Devote to the research and development of high value-added products and low- and mediumpriced car tires Market segmentation, etc. In recent years, the company's products have been developing towards higher value, and the market share in Europe and Japan has been successfully increased. It is obvious that the management of the

company has responded quickly to the market, responded flexibly to the market, and self-requirements for high internal standards. 。

In 2014, the former material department of the company, Assistant Chen, unlawfully demanded a rebate case from the manufacturer. After the company filed a criminal complaint and a civil lawsuit, the whole case was confirmed on April 22, 108, and Chen XX and Zhang XX have been paid in accordance with the judgment. 。

In addition, the company’s investigation revealed that the former executive vice president Hu XX was requesting unlawful kickbacks from the manufacturer. The company has appointed a lawyer to file a criminal complaint against the former executive vice president Hu before the Criminal Police Department of the Police Department of the Ministry of the Interior. The case is now in Taipei. Investigation by the District Prosecutor's Office 。

Thanks to the support of all investment shareholders and the efforts of the management team and all colleagues in the past year. In recent years, the international economic situation has changed rapidly. In the face of the reshuffle of the global economic market order, the biggest advantage of traditional brands is credit and quality. The business philosophy of "integrity, pragmatism, and innovation" has laid a good foundation over the years. The entire management team has the determination and innovation to change together. Starting from concept communication, all people have the same concept.

The business strategy focuses on "how to solve long-term and valuable for customers "The problem, and it plays an important role in the overall supply chain; Nankang Tire Company, as a time-honored Taiwanese brand, will also uphold the tire-like spirit of solid wear resistance in the future, and continue to smooth the global tire market 。

Looking forward to 2021, Taiwan's Xin Feng plant has completed the 20,000-production expansion plan. Currently, the capacity utilization rate of Taiwan's Xin Feng plant and the mainland Zhangjiagang plant are both over 90% (the maximum daily output of Xin Feng plant can reach 20,000, and the Zhangjiagang plant's daily The maximum output is 18,000 pieces) to respond to domestic and foreign market demands; the company also continues to improve

R&D capabilities and product quality, to enter the level of international first-tier manufacturers, and to implement the four essentials of continuous planning, execution, analysis and correction. It will be better, more refined, and thinner, and become bigger and stronger in physique. The company will continue to focus on the core business of automobiles, motorcycles, and truck tires with a pragmatic spirit, and win with service differentiation and technical data, to provide customers with different needs around the world with better quality, more environmentally friendly, and more durable products. Repay the expectations of investment shareholders, company colleagues and global customers for the company with brilliant business performance 。

Operating Performance in 2020 ：

(1) Operating Performance ：
1.Individual operating income in 2020 is NT$6,218,316 thousand compared to 2019's individual operating income of NT$6,821,212 。
thousand, and individual turnover is reduced by 8.84%
2.Consolidated operating income in 2020 is NT$9,695,119 thousand, compared with 2019 consolidated operating income of NT$11,111,580 。
thousand, the combined turnover is reduced by 12.75%
3.The combined net profit after tax in 2020 is 844,378 thousand yuan compared with the combined net profit after tax in 2019 of NT$1,135,684 thousand, which is a decrease of 25.65% in net profit 。
after tax.
(2) Budget implementation ：

the company’s actual sales of various tires (including PCR, LTR, MCR, MC, SC, etc.) totaled 5,453 thousand, which is compared with the 2020 budget of 6,500 thousand, and the achievement rate is 83.89% in 2020.

(3) Financial income and expenditure and profitability analysis ：

Unit: NT$ thousand dollars

	year	parent Company	parent Company	parent Company		Consolidated
item				increase			increase
		2020	2019		2020	2019
				(decrease)%			(decrease)%

Revenue And Loss	Operating revenue	6,218,316	6,821,212	-8.84	9,695,119	11,111,580	-12.75
	Gross Profit Before Unrealized Gross	1,419,488	1,308,890	8.45	2,330,381	2,057,885	13.24
	Net Income	844,378	1,135,684	-25.65	844,378	1,135,684	-25.65
Profitability Analysis	ROA(%)	4.46	6.02	-25.91	3.10	4.87	-36.34
	ROE (%)	7.86	10.77	-27.02	7.86	10.77	-27.02
	OIK(%)	7.24	5.37	34.82	12.34	8.57	43.99
	PK (%)	12.73	15.28	-16.69	13.44	16.01	-16.05
	PROM(%)	13.58	16.65	-18.44	8.71	10.22	-14.77
	RAEPS (Dollars)	1.05	1.42	-26.06	1.05	1.42	-26.06

Research and development status: New research and development equipment and products are expected to be completed in 2021 as follows ：

（ 1 ） Developed rain tires for racetracks.
（ 2 ） European label (RRC, Wet) double A-level summer tire product research and development.
（ 3 ） Development of all-weather tires with European labels Wet A and RRC B.
（ 4 ） Research and development of European label Wet A-class and RRC
B-class electric tire products.
（ 5 ） Developed the new-generation snow tire AW-1 in Japan.
（ 6 ） Development of new stud-free snow tire SV-4 in Central and Southern Europe.

Business Plan for 2021 ：

Business objectives ：

I. Continuous sales and R&D concepts centered on customer 。
experience
II. Improve the process efficiency, strictly control the production cost, 。
and the production utilization rate is over 93%
。
III. Strive to reduce waste and waste by 50%
IV. Continue to implement the OHSAS18001 and CNS15506 systems, and strengthen the management of the improvement of industrial 。
safety and working environment
V. Strengthen the integration between production and sales
departments to achieve the goal of fast order receipt and fast

。 shipment

。
VI. Actively build physical and online marketing channels
VII.Production process and warehousing logistics continue to be automated, three-dimensional, and intelligent to improve 。
efficiency

VIII.Develop high value-added tires and continue to improve the

。 performance of existing products

Expected sales volume ： The company's 2021 annual sales volume of various tires (including PCR, LTR, MCR, MC, SC, etc.) is expected to be 6,000 thousand 。

Development Strategy ：

(1) Oriented by customer experience, continue to develop customized, high value-added products.

Strengthen internal control and improve corporate governance capabilities.

Increase physical sales bases in major markets around the world.

Increase market share in domestic, mainland, North America and the Middle East.

Strengthen the marketing planning function, and continue to participate in international exhibitions to enhance the company's reputation and product image.

Improve operation and management capabilities, cultivate competent

talents, and integrate human resources.

Develop a complete layout of tire products and maintain a niche for diversified production and competition.

Strengthen the development of environmentally friendly and energy-saving tires to facilitate the development of the environmentally friendly tire market.

Speed up the development of new products and create products with high CP value.

In response to the era of meager profits, expand profit margins with "management profits" and "quick response" 。

The Impact of the External Competitive Environment, Regulatory Environment, and Macroeconomic Conditions ：

(1) beneficially affect ：
Obtaining the TÜV SÜD Mark tire certification is conducive to the 。

development, sales and brand image of energy-saving tires

Restrictions on certification checkpoints in various countries, such as

mainland 3C, European E-MARK, American DOT, Indonesian SNI, Brazil INMETRO, Indian BIS, Middle East GCC, etc., increase the 。 sales threshold and ease the pressure of competitors

The rise of automobile markets in emerging countries (such as Vietnam, 。

India) and increased tire market demand

The prices of man-made rubber and natural rubber have fallen sharply 。

compared with previous years, so that the rising cost has been eased

Negative Effects ：

。
1. Affected by the COVID-19, the demand for tire usage has decreased
Environmental protection laws and regulations are formulated more rigorously, resulting in an increase in the cost of pollution source 。

treatment equipment and environmentally friendly raw materials

In a turbulent environment, only continuous growth and innovation are the way to survive.

Thanks again to the shareholders for their support over the years. In addition to focusing on the production of the industry, Nankang Tire will also adhere to the concepts of "sustainable operation" and "green production", continue to create brighter operating performance, and give back to all investment shareholders.

Chairman - Zhang, Chang Ping

II. Company Profile

2.1 Date of Incorporation: February 20, 1959

2.2 Company History

Year	Milestones
1940	The company "Nankang Factory", founded in 1940, formerly known as "Nankang Rubber Factory", mainly produces rickshaw tires, rubber shoes and industrial rubber products
1959	"Nankang Rubber Tire Co., Ltd." was established in January, and technical cooperation with "Yokohama Co., Ltd. of Japan", with a capital of NT$2,200,000, and the main business is theproduction of various automobile tires.
1963	The stock was publicly listed in November, The capital at that time was NT$67,500,000
1973	Construction of "Xin-feng Factory" completed.
1976	Completed the development of "propeller trainer aircraft tires".
1981	"All-steel radial layer tires for large-truck buses" were successfully developed and officiallylaunched
1982	Concluded a business management and technical consulting contract with Yokohama Co.,Ltd.
1983	The Ministry of Economic Affairs approved Yokohama Homo Co., Ltd. to invest in the company and increase its capital by NT$50,000,000, and the paid-in capital increased to NT$927,820,000.
1984	Won the Quality Control Organization Award from the Quality Control Society of the Republic of China.
1988	Yokohama Co., Ltd. authorizes the production of Yokohama brand products.
1996	Yokohama Co., Ltd. officially withdrew from the management of the company in May.
1997	Zhangjiagang Factory was approved for establishment.
2002	To improve the financial structure, the capital was reduced to NT$1,086,674,000.
2003	In September, Zhangjiagang Factory officially produced.
2008	In January, the Nankang plant stopped production and started planning the development of the worldpearl.

時間	主要沿革
2013	In March, it was verified by SGS and passed the two certifications of "OHSAS 18001 and CNS15506 Occupational Safety and Health Management System".
2014	In March, ECO-2+ new generation energy-saving and environmentally friendly tires were awarded the first TÜV SÜD Mark tire certification in Taiwan. In May, the development of the new pattern SP-9 for large SUVs began. In July, the development of snow tire ICE-1 for Northern Europe was completed. Started development of AT-5 all-weather tires for SUVs in the Americas in August. In November, the development of the new pattern SP-9 for large SUVs was completed. In November, the development of the studless snow tire SV-3 for northern Europe with a newpattern began.
2015	In January, the development of a new generation of studded snow tire SW-8 for passenger cars began. In December,AS-2+ was awarded the TÜV SÜD Mark tire certification.
2016	Started to develop the new American pattern ALL SEASON UHP NS-25 in January. In March, AS-2+ was awarded the "Innovative Product Silver Award" at the 2016 Taipei International Auto Parts Show hosted by the Republic of China Foreign Trade Association. In August, completed the all-steel (LTS) studless snow tire SA-600 for light trucks in Hokkaido. In November, the new pattern AW-8 for European commercial four-season tires was completed. Completed the new pattern IV-1 for European commercial nailing snow tires in December.
2017	In June, the development of the European all-hot melt tire SL-1 began. In December,the European all-season tirepattern AW-6 was completed.
2018	Completed the development of Hokkaido studless snow tire WS-1 Completed the development of 4*4 tires LUCA in Asia. Completed the development of special non-marking tires. The track-use bald tire SL-1 officially enters the European Cup
2020	Completed the development of retro tires with wide white edges. Completed the development of 44 tires SX-6 in Central and South America. Completed the new development of 44 tire RT in Southeast Asia. Completed the development of the new Nordic snow tire SW-9. Completed the development of the Nordic new stud-free snow tire ICE-2. Completed the development of Run flat depressurized tire (snow tire).

III.Corporate Governance Report

3.1 Organization

3.1.1 Organizational Chart

3.1.2 Major Corporate Functions

Department	Functions
Audit	To grasp the focus of the problem for the entire company's business, and put forward suggestions for improvement, so as to rationalize the operation and improve the efficiency.
Secretariat	Preparation of board information and submission of proposals, as well as production and storage of meeting minutes, and assist directors and supervisors to understand relevant laws and regulations.
Project Office	Handle land development and other related businesses related to Nanrong Development and Construction Co., Ltd.
Legal Affairs Section	Provide legal assistance for the conclusion, modification, and negotiation of important contracts for the entire company, and assist in handling important contract decisions, litigation and other legal disputes.
purchasing Dept.	For the improvement, guidance and assistance of raw materials, machinery and equipment, etc. and outsourcing quality requirements and bargaining management, and company-wide purchasing business.
Finance Dept.	Responsible for the company's financial strategies such as the allocation and use of funds, and coordinate the company's settlement business.
Industrial Safety Office	Plan and supervise the establishment of education and benchmarks for the company's environmental protection, safety, health, and fire protection businesses, and promote relevant disaster prevention countermeasures and pollution prevention.
Administration Dept.	The overall planning and promotion of personnel, general affairs and training and the formulation of methods.
IT Dept.	Plan the design and development of the company-wide information system, as well as the maintenance and management of information software and hardware, and support the information business of all departments of the company.
Domestic Sales Department	Set up, promote, and manage benefit plans for the domestic sales market and OEM.
Overseas Sales Dept. I	For overseas markets (including Europe, North America, Central and South America, heavy-duty locomotives, etc.), the establishment, promotion and management of profit plans.
Overseas Sales Dept. II	For overseas markets (including markets in Asia, Oceania, the Middle East, Africa, etc.), the establishment, promotion and management of benefit plans, and all marketing plans... and other related matters.
Sales Promotion Dept.	To promote the promotion of the company's brand and market positioning, and to carry out all marketing planningrelated matters.
Q.A. Dept.	The establishment of the quality assurance system and the promotion and management of standardization; the management and promotion of the company-wide quality activities.

Material Research Department	Regarding material technology, function enhancement of the filing, promotion, and management; product design and quality improvement of information collection and analysis.
Design Dept.	Initiation and promotion of management related to the enhancement of design technology functions; information collection and analysis of new product design and quality improvement, and promotion of management, initiation and promotion of LTR (4WD, VAN)/PCR, MCR/LTS/TBR and model quality maintenance , Tracking and other related businesses.
Development Dept.	New product research and simulation tests, and data collection, to establish a research and development database.
Product Control Dept.	Based on the company-wide plan, file a case, adjust, and promote the factory's basic production plan (quantity, personnel, equipment, manufacturing... etc.).

3.2 Directors, Supervisors and Management Team

3.2.1 Directors and Supervisors

Date ： March 13, 2021


										Spouse &		Shareholding
						Shareholding when
			Nationality/	Date Elected	Term	Elected		Current Shareholding		Minor		by Nominee		Experience	Other
Title	Name	Gender	Country of	<Date First						Shareholdin		Arranement
			Oriin	Elected>	(Years)					g		g		（Education）	Position
			g			Shares	％	Shares	％	Shares	％	Shares	％

Chairman	Quanye Investment Co., Ltd.	Male	R.O.C.	108.05.16 <92.03.19>	3	33,396,666	4%	33,941,666	4.07%	0	0	0	0	Bachelor’s degree in Management, New Taipei Municipal Tamsui Commercial Industrial Vocational Senior High School	Note 1
	Zhang, Chang-Ping			106.09.27 <108.05.16>		688,771	0.08%	688,771	0.08%	0	0	0	0
Director	Quanye Investment Co.,Ltd.	Female	R.O.C.	108.05.16 <92.03.19>	3	33,396,666	4%	33,941,666	4.07%	0	0	0	0	Bachelor’s degree President of Nankang Rubber tyres	Note 2
	Zhan, Cai- Yun			108.05.16 <92.11.27>		4,973,852	0.6%	5,037,547	0.6%	1,364	0	0	0
Director	Quanye Investment Co.,Ltd.	Female	R.O.C.	108.05.16 <92.03.19>	3	33,396,666	4%	33,941,666	4.07%	0	0	0	0	Master’s degree, Johnson & Wales University	Note 3
	Lin, Jun-Ying			108.05.16 <102.06.13>		18,933,571	2.27%	18,933,571	2.27%	0	0	0	0
Director	Quanye Investment Co.,Ltd.	Male	R.O.C.	108.05.16 <92.03.19>	3	33,396,666	4%	33,941,666	4.07%	0	0	0	0	Bachelor’s degree in Mechanical Engineering, St. John's and St. Mary's Institute of Technology	None
	Guo, Sheng- Wen			108.05.16 <105.09.10>		823,132	0.1%	823,132	0.1%	0	0	0	0

			Nationality/	Date Elected	Term			Current Shareholding	Current Shareholding			Shareholding by Nominee	Shareholding by Nominee	Exerience	Other
						Shareholding when Elected				Spouse & Minor Shareholding
Title	Name	Gender	Country of Origin	Elected>	(Years)							Arrangement		p （Education）	Position
						Shares	％	Shares	％	Shares	％	Shares	％


Director	Quanye Investment Co.,Ltd.	Male	R.O.C.	108.07.10 <92.03.19>	3	33,396,666	4%	33,941,666	4.07%	0	0	0	0	Bachelor’s degree in Engineering, National United University	Note 4
	Wu, Yuan- Sheng			108.07.10 <106.02.06>		290,000	0.03%	70,000	0.01%	0	0	0	0
Director	Quanye Investment Co.,Ltd.	Female	R.O.C.	108.07.10 <92.03.19>	3	33,396,666	4%	33,941,666	4.07%	0	0	0	0	Bachelor’s degree	Note 5
	Jiang, Xiu- Zhen			108.07.10 <108.07.10>		3,068,331	0.37%	3,068,331	0.37%	0	0	0	0
Director	Quanye Investment Co.,Ltd.	Male	R.O.C.	108.07.10 <92.03.19>	3	33,396,666	4%	33,941,666	4.07%	469	0	0	0	Master’s degree in Public Order, University of Leicester	Note 6
	Jiang, Qing- Xing			108.07.10 <109.11.13>		0	0%	0	0%
Independent director	Wu, Si-Yi	Female	R.O.C.	108.05.16 <96.04.24>	3	0	0%	0	0%	0	0%	0	0%	`‧`Master’s degree in Management, National Taiwan University of Science and Technology `‧`Lawyer	None
Independent director	Zheng, Hui- Rong	Female	R.O.C.	108.05.16 <96.04.24>	3	0	0%	0	0%	0	0%	0	0%	Master’s degree of Kansas State University、	None

Independent director	Chen, Zhu- Que	Female	R.O.C.	108.05.16 <108.05.16>	3	0	0%	0	0%	0	0%	0	0%	Bachelor’s degree of Fu-Jen Catholic University	None

Note 1 ： Chairman of the company, Chairman of Nankang (Zhangjiagang Free Trade Zone) Rubber Industry Co., Ltd., Chairman of Taipei Nanhung Tire Co., Ltd., Chairman of Nanrong Construction Developments Company 。

Note 2 ： President of the company 。

Note 3 ： Director of Nanrong Construction Developments Co., Ltd., Director of Moxun Computer Co., Ltd., Supervisor of Taipei Nanhung Tire Co., Ltd., Director of Nankang (Zhangjiagang Free Trade Zone) Rubber Industry Co., Ltd., Director of Nangkang Tire (Singapore) Pte Ltd, Director of Nanguan Tire Co., Ltd. 。

Note 4 ： The company's R&D director, Nankang (Zhangjiagang Free Trade Zone) Rubber Industry Co., Ltd. director 。

Note 5 ： Supervisor of Nanrong Construction Developments Co., Ltd. supervisor (dismissed on November 13, 2020), legal person director Quan Ye Investment Co., Ltd. notified the replacement of legal person director representative on November 13, 2020 。

Note 6 ： Supervisor of Nanrong Construction Developments Co., Ltd. supervisor (appointed on November 13, 2020), legal person director Quan Ye Investment Co., Ltd. notified the replacement of legal person director representative on November 13, 2020 。

Note 7 ： Managers or Directors who are spouses or within second-degree relative of consanguinity to the direc

Note 8 ： Managers or Directors who are spouses or within second-degree relative of consanguinity to the directors: None.

Note 9 ： Chairman and President (or someone with an equivalent job responsibility, i.e. the highest ranking manager of the company) are not (1) the same person, (2) in a marital relationship with each other, or (3) within one degree of consanguinity.

Major shareholders of the institutional shareholders


Institutional Shareholder	Major Shareholders of the Institutional Shareholder

Quanye Investment Co., Ltd.	Lin, Zheng-Hui 83.58%

Professional qualifications and independence analysis of directors and supervisors ：

	Meet the Following Professional Qualification Requirements,	Meet the Following Professional Qualification Requirements,	Meet the Following Professional Qualification Requirements,
								符合獨立性情形(註2)
	Together with at Least Five Years Work Experience
																Number of
	An Instructor or Higher	A Judge, Public Prosecutor,	Have Work
Criteria																OtherTaiwa
	Position in a Department	Attorney, Certified Public	Experience in
																nese
	of Commerce, Law,	Accountant, or Other	the Area of
																PublicComp
	Finance, Accounting, or	Professional or Technical	Commerce,
																aniesConcur
	Other Academic	Specialists Who Has Passed	Law, Finance,
				1	2	3	4	5	6	7	8	9	10	11	12	rently
	Department Related to	a National Examination	or Accounting,
																Serving as
	the Business Needs of the	and Been Awarded a	or Otherwise
Name																anIndepend
	Company in a Public or	Certificate in a Profession	Necessary for
																entDirector
	Private Junior College,	Necessary for the Business	the Business of

	College or University	of the Company	the Company
Zhang, Chang-Ping			V	V		V	V		V	V	V	V	V	V	V	None
Zhan, Cai-Yun			V			V	V		V	V	V	V	V	V	V	None
Guo, Sheng-Wen			V			V	V		V	V	V	V	V	V	V	None
Lin, Jun-Ying			V				V		V	V	V	V	V	V	V	None
Wu, Yuan-Sheng			V			V	V		V	V	V	V	V	V	V	None
Jiang, Xiu-Zhen			V			V	V		V	V	V	V	V	V	V	None
Jiang, Qing-Xing			V	V		V	V		V	V	V	V	V	V	V	None
Wu, Si-Yi		V	V	V	V	V	V	V	V	V	V	V	V	V	V	None
Zheng, Hui-Rong		V	V	V	V	V	V	V	V	V	V	V	V	V	V	None
Chen, Zhu-Que			V	V	V	V	V	V	V	V	V	V	V	V	V	None

（ 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;

（ 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 others’ names, in an aggregate amount of one percent or more of the total number of issued shares of the company or ranks as one of its top ten shareholders;
（ 4 ） Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the officer in the preceding 1 subparagraph, or of any of the above persons in the preceding subparagraphs 2 and 3;
（ 5 ） Not a director, supervisor, or employee of a corporate/institutional shareholder that directly holds five percent or more of the total number of issued shares of the company, ranks as of its top five shareholders, or has representative director(s) serving on the company’s board based on Article 27 of the Company Law;
（ 6 ） Not a director, supervisor, or employee of a company of which the majority of board seats or voting shares is controlled by a company that also controls the same of the company;
（ 7 ） Not a director, supervisor, or employee of a company of which the chairman or CEO (or equivalent) themselves or their spouse also serve as the company’s chairman or CEO (or equivalent);
（ 8 ） Not a director, supervisor, officer, or shareholder holding five percent or more of the shares of a specified company or institution that has a financial or business relationship with the company;
（ 9 ） Other than serving as a compensation committee member of the company, not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides commercial, legal, financial, accounting services or consultation to the company or to any affiliate of the company, or a spouse thereof, and the service provided is an “audit service” or a “nonaudit service which total compensation within the recent two years exceeds NTD500,000”;
（ 10 ） Not having a marital relationship, or a relative within the second degree of kinship to any other director of the company;
（ 11 ） Not been a person of any conditions defined in Article 30 of the Company Law; and
（ 12 ） Not a governmental, juridical person or its representative as defined in Article 27 of the Company Law.

3.2.2 Management Team

March 13, 2021

												Selected	Managers Who are Spouses	Managers Who are Spouses	Managers Who are Spouses
									Shares Held in
							Shares Held by					Current	or within Second-degree
					Shares Held				the Name of
												Position	Relative of Consanguinity to
				On-board			Spouse & Minors		Others		Education and Selected
Title	Nationality	Name	Gender									s at	Each Other
				Date							Past Positions
												Other

					Shares	%	Shares	%	Shares	%		Compan	Title	Name	Relation
												ies
President	R.O.C.	Zhan, Cai- Yun	Female	10/24/2002	5,037,547	0.60%	1,364	0.00	0	0.00	Bachelor’s degree	None	None	None	None
Vice President of R&D	R.O.C.	Peng, Tian- Cheng	male	03/01/2010	1,014,048	0.12%	0	0.00	0	0.00	Bachelor’s degreein Engineering, National Kaohsiung University of Applied Science	None	None	None	None
Director	R.O.C.	Hong, Jian- Zhong	male	03/01/2010	15,229	0.00%	0	0.00	0	0.00	Bachelor’s degreein International Trade, Tung-hai University	None	None	None	None
Director	R.O.C.	Wu, Yuan- Sheng	male	04/15/2015	70,000	0.01%	0	0.00	0	0.00	Bachelor’s degree in Engineering, National United University	None	None	None	None
financial manager	R.O.C.	Guo, Mei- Hang	Female	06/27/2016	327,414	0.04%	0	0.00	0	0.00	Bachelor’s degree inPublic administration, National ChungHsing University	None	None	None	None

Note 1 ： President (or someone with an equivalent job responsibility, i.e. the highest ranking manager of the company) and Chairman are not (1) the same person, (2) in a marital relationship with each other, or (3) within one degree of consanguinity.

Unit: NT$ dollars

3.2.3 Remuneration of Directors, Supervisors, President, and Vice President

Remuneration of Directors

Title/Name	Director's Remunera	Director's Remunera	Director's Remunera	Director's Remunera	Director's Remunera	Director's Remunera	Director's Remunera	Director's Remunera	(A+B+C+D) as a % of Net Income	(A+B+C+D) as a % of Net Income	Compensation Earned by a Director Who is an Employee of Nankang or of Nankang’s Consolidated Enties	Compensation Earned by a Director Who is an Employee of Nankang or of Nankang’s Consolidated Enties	Compensation Earned by a Director Who is an Employee of Nankang or of Nankang’s Consolidated Enties	Compensation Earned by a Director Who is an Employee of Nankang or of Nankang’s Consolidated Enties	Compensation Earned by a Director Who is an Employee of Nankang or of Nankang’s Consolidated Enties	Compensation Earned by a Director Who is an Employee of Nankang or of Nankang’s Consolidated Enties	Compensation Earned by a Director Who is an Employee of Nankang or of Nankang’s Consolidated Enties	Compensation Earned by a Director Who is an Employee of Nankang or of Nankang’s Consolidated Enties	(A+B+C+D+E+F+G) as a % of Net Income	(A+B+C+D+E+F+G) as a % of Net Income	Compensatio n Paid to Directors from Non- consolidated Affiliates or
	Base Compensation (A)		Severance Pay and Pension (B)		Compensation to Director(C)		Allowances (D)				Base Compensation, Bonuses, and Allowances (E)		Severance Pay and Pensions (F)		Profit Sharing (G)
	From	From All Clidtd	From	From All Clidtd	From	From All Clidtd	From	From All Clidtd	From	From All Clidtd	From	From All Clidtd	From	From All Clidtd	From Nankang		From All Consolidated Entities		From	From All Clidtd
	Nankang	onsoae Entities	Nankang	onsoae Entities	Nankang	onsoae Entities	Nankang	onsoae Entities	Nankang	onsoae Entities	Nankang	onsoae Entities	Nankang	onsoae Entities	Cash	Stock (Fair Market Value)	Cash	Stock (Fair Market Value)	Nankang	onsoae Entities	Parent Company
Chairman Quanye Investment Co., Ltd. Zhang, Chang-Ping	280,000	280,000	-	-	-	-	54,000	69,500	0.04%	0.04%	1,776,500	1,776,500	-	-	-	-	-		0.25%	0.25%	None
Director Quanye Investment Co., Ltd. Zhan, Cai-Yun	280,000	280,000	-	-	-	-	60,000	60,000	0.04%	0.04%	4,299,780	4,299,780	108,000	108,000	-	-	-		0.56%	0.56%	None
Director Quanye Investment Co., Ltd. Lin, Jun-Ying	240,000	240,000	-	-	-	-	60,000	185,000	0.04%	0.05%	1,896,654	1,896,654	62,628	62,628	2,100	-	2,100		0.27%	0.28%	None
Director Quanye Investment Co., Ltd. Wu, Yuan-Sheng	240,000	240,000	-	-	-	-	60,000	61,500	0.04%	0.04%	1,929,578	1,929,578	82,512	82,512	1,885	-	1,885		0.27%	0.27%	None
Director Quanye Investment Co., Ltd. Guo, Sheng-Wen	240,000	240,000	-	-	-	-	12,000	12,000	0.03%	0.03%	3,369,516	3,369,516	101,952	101,952	2,187	-	2,187		0.44%	0.44%	None
Director Quanye Investment Co., Ltd. Jiang, Xiu-Zhen	208,667	208,667	-	-	-	-	60,000	60,000	0.03%	0.03%	1,121,660	1,121,660	40,128	40,128	1,610	-	1,610		0.17%	0.17%	None
Director Quanye Investment Co., Ltd. Jiang, Qing-Xing	-	-	-	-	-	-	-	-	0.00%	0.00%	128,000	128,000	7,699	7,699	-	-	-		0.02%	0.02%	None
Independent Director Zheng, Hui-Rong	735,490	735,490	-	-	-	-	60,000	60,000	0.09%	0.09%	89,000	89,000	-	-	-	-	-	-	0.10%	0.10%	None
Independent Director Wu, Si-Yi	735,190	735,190	-	-	-	-	60,000	60,000	0.09%	0.09%	89,000	89,000	-	-	-	-	-	-	0.10%	0.10%	None
Independent Director Chen, Zhu-Que	245,490	245,490	-	-	-	-	60,000	60,000	0.04%	0.04%	34,000	34,000	-	-	-	-	-	-	0.04%	0.04%	None
Note 1: Directors and Independent Directors’ remuneration policies, procedures, standards and structure, as well as the linkage to responsibilities, risks and time spent:：According to the company’s articles of association, the remuneration of all directors shall be paid regardless of profit or loss. The upper limit of the chairman’s remuneration shall not exceed 1.5 times the salary of the general manager, and the upper limit of the vice chairman’s remuneration shall not exceed 1 times the salary of the general manager. The other directors’ remuneration shall be paid according to the same industry level. However, the remuneration of independent directors is slightly higher than that of non-independent directors. The company also purchases liability insurance for directors to reduce the risk of directors being sued by shareholders or other related parties for performing their duties in accordance with the law.。 Note 2: Zheng, Hui-Rong(Independent Director) double as Audit and Remuneration Committee, the compensation paid is NT$132,000。 Note 3: Wu, Si-Yi(Independent Director) double as Audit and Remuneration Committee, the compensation paid is NT$132,000。 Note 4: Chen, Zhu-Que(Independent Director) double as Audit and Remuneration Committee, the compensation paid is NT$132,000。

Remuneration of the President and Vice President

Unit: NT$ dollars


											(A+B+C+D) as a % of Net
	Salary (A)		Severance Pay and Pensions (B)		Bonuses and Allowances (C)		Profit Sharing (D)						Compensation
											Income
													Paid to Directors

									From All Consolidated				from Non-
Title / Name							From Nankang
		From All		From All		From All			Entities			From All	consolidated
	From
		Consolidated	From Nankang	Consolidated	From	Consolidated		Stock (Fair		Stock (Fair	From Nankang	Consolidated	Affiliates or
	Nankang
		Entities		Entities	Nankang	Entities	Cash	Market	Cash	Market		Entities	Parent Company

								Value)		Value)
President Zhan, Cai-Yun	3,611,770	3,611,770	108,000	108,000	618,010	618,010	0	0	0	0			None
											0.514%	0.514%

Vice President Peng, Tian-Cheng	1,880,017	1,880,017	107,748	107,748	1,020,695	1,020,695	2,187	0	2,187	0
											0.357%	0.357%

Remuneration of Top Five Employees

Unit: NT$ dollars


			Severance Pay and Pensions								(A+B+C+D) as a % of
	Salary (A)				Bonuses and Allowances (C)		Profit Sharing (D)
			(B)								Net Income
													Compensation

													Paid to Directors
									From All
													from Non-
Title / Name							From Nankang		Consolidated				consolidated
	From	From All	From	From All	From	From All			Entities		From	From All	Affiliates or
	Nankang	Consolidated	Nankang	Consolidated	Nankang	Consolidated		Stock		Stock	Nankang	Consolidated	Parent Company
		Entities		Entities		Entities	Cash	(Fair	Cash	(Fair		Entities
								Market		Market

								Value)		Value)
President Zhan, Cai-Yun	3,611,770	3,611,770	108,000	108,000	618,010	618,010	-	-	-	-			None
											0.514%	0.514%

Vice President of R&D Peng, Tian-Cheng	1,880,017	1,880,017	107,748	107,748	1,020,695	1,020,695	2,187	0	2,187	0
											0.357%	0.357%

Director of Overseas Sales Dept. Hong, Jian-Zhong	1,293,340	1,293,340	-	-	2,101,919	2,101,919	1,885	0	1,885	0
											0.402%	0.402%

Director of R&D Wu, Yuan-Sheng	1,228,316	1,228,316	82,512	82,512	701,262	701,262	1,885	0	1,885	0
											0.239%	0.239%

Manager of Overseas Sales Dept. Zhuang, Ming-Hong	1,027,808	1,027,808	69,012	69,012	2,620,837	2,620,837	2,187	0	2,187	0
											0.441%	0.441%

Employees’ Profit Sharing Paid to Management Team

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

Unit: NT$ dollars
Stock (Fair
Ratio of Total Amount to Net
Title / Name Market Cash Total
Income (%)
Value)
President
Zhan, Cai-Yun
Vice President of R&D
Peng, Tian-Cheng
Director of Overseas Sales Dept.
8,144 8,144 0.001%
Hong, Jian-Zhong
Director of R&D Dept.
Wu, Yuan-Sheng
Manager of Finance Dept.
Guo, Mei-Hang
----- End of picture text -----

3.2.4 Comparison of Remuneration for Directors, Supervisors, Presidents and Vice Presidents in the Most Recent Two Fiscal Years and Remuneration Policy for Directors, Supervisors, Presidents and Vice Presidents 。

1.The ratio of total remuneration paid by the Company and by all companies included in the consolidated financial statements for the two most recent fiscal years to directors, supervisors, presidents and vice presidents of the Company, to the net income ：


item	2019	2020

The company	2.758%	3.538%
From All Consolidated Entities	2.813%	3.572%

2.Compensation policy, standards/packages, procedures, the linkage to operating performance and future risk exposure:.
（ 1 ） The remuneration of directors and supervisors was drafted, and the board of directors passed the organizational rules for the remuneration committee of directors, supervisors and managers 。
（ 2 ） The pros and cons of business performance affect the distribution of year-end bonuses for business executives 。
（ 3 ） The directors (including independent directors) of the company receive fixed remuneration, and all directors do not receive remuneration except for the payment of each board attendance fee 。
（ 4 ） Manager’s remuneration includes salary and bonus. Salary refers to the same industry level and items such as job title, rank, academic (economic) background, professional ability and responsibilities. Bonus is highly linked to performance evaluation goals, including financial indicators (such as company revenue, The achievement rate of net profit before tax and net profit after tax), non-financial (such as serving as an instructor in the talent training plan, reducing major deficiencies in compliance with laws and regulations and operational risk issues in the departments under your jurisdiction), and responding to climate change (such as product research and development, innovation, and improvement). Use green power ratio) and other medium- and long-term indicators, and according to the salary and compensation committee’s recommended allocation principles, and approved by the chairman based on operating performance 。

3.3 Implementation of Corporate Governance

3.3.1 Board of Directors ：

Board of Directors convened ten meetings in 2020. The directors’ attendance

status is as follows. ：

	Attendance in		Attendance Rate (%)
Title / Name		By Proxy		Remarks
	Person (B)		【Ｂ/Ａ】

Chairman Quanye Investment Co., Ltd. Zhang, Chang-Ping	9	1	90.00	None
Director Quanye Investment Co., Ltd. Zhan, Cai-Yun	10	0	100.00	None
Director Quanye Investment Co., Ltd. Lin, Jun-Ying	10	0	100.00	None
Director Quanye Investment Co., Ltd. Guo, Sheng-Wen	2	0	20.00	None
Director Quanye Investment Co., Ltd. Wu, Yuan-Sheng	10	0	100.00	None
Director Quanye Investment Co., Ltd. Jiang, Xiu-Zhen	10	0	100.00	Dismissed on 11/13/2020
Director Quanye Investment Co., Ltd. Jiang, Qing-Xing	-	-	-	Assumed on 11/13/2020
Independent Director Zheng, Hui-Rong	10	0	100.00	None
Independent Director Wu, Si-Yi	10	0	100.00	None
Independent Director Chen, Zhu-Que	10	0	100.00	None
Other mentionable items： (1)If there are circumstances referred to in Article 14-3 of the Securities and Exchange Act and resolutions of the directors’ meetings objected to by independent directors or subject to qualified opinion and recorded or declared in writing, the dates of the meetings, sessions, contents of motion, all independent directors’ opinions and the company’s response should be specified：

		Resolution of the Audit
		Committee and the Company’s
Date	Resolution
		response to the Audit

		Committee’s Opinion
02/24/2020	（1） Appoint the Baker Tilly Clock & Co CPAS to sign the 2020 financial reports. （2） Approving 2020 Statement of Internal Control System.	The members of the Audit Committee unanimously approved all the resolutions
02/25/2020	（1） To maintain contacts with various banks, agree on the financing line to be met by the capital, list all the credit lines, and submit for approval. （2） Provide guarantee and submit for approval to Nankang International Co.Ltd.due to raising financing from the bank. （3） Due to the needs of medium-term funds, the company applied for financing quota to Hua Nan Commercial Bank.
04/14/2020	Approving of the company use the capital of NT$300,000,000 to invest in the stocks of other listed companies.
04/22/2020	Approving of the company use the capital of NT$400,000,000 to invest in the stocks of other listed companies.
05/08/2020	Approving of the company's new application for financing line from Huanan Bank due to capital needs.
06/24/2020	（1） Approving of the company to invest in the stocks of other listed companies at NT$200,000,000. （2） Approving of the company’s application for financing lines to the Shanghai Commercial Savings Bank due to medium-term funding needs.
07/21/2020	Approving of the company to invest in the stocks of other listed companies at NT$200,000,000.
08/10/2020	（1） Approving of the company's application for medium-term financing lines from Hua Nan Commercial Bank. （2） Approving of formulation of the company's "Board Performance Evaluation Measures". （3） Approving of the company to invest in the stocks of other listed companies at NT$200,000,000.
08/11/2020	（1） Approving of the company's financial statements for the second quarter of 2020. （2） Approved the company's second quarter of 2020 earnings distribution proposal.
11/05/2020	（1） Approving of the company's application to Shanghai Commercial Bank for short-term purchase of materials. （2） Approving of the company’s customers whose accounts receivable exceed the normal credit extension period to be changed to a capital loan case. （3） Approving of the establishment of "Corporate Governance Officer". （4） Approving of the company to invest in the stocks of other listed companies at NT$300,000,000

（ 5 ） Approval of the company’s 2021 audit plan declaration form.
(2)If there are directors’ avoidance of motions in conflict of interest, the directors’ names, contents of motion, causes for

avoidance and voting should be specified: None.

(3)Measures taken to strengthen the functionality of the board ：
The company has set up independent directors and established an audit committee, and regularly convenes the board of directors and audit committees. In addition, in accordance with the "Procedures for Board Meetings of Public Offering Companies", the company's "Code of Procedures for Board Meetings" is used to carry out the functions of the board of directors in accordance with relevant regulations. 。
In order to enhance information transparency, the company’s major resolutions of the board of directors, the appearance of directors and supervisors on the board of directors, and the participation of directors and supervisors in corporate governance-related training courses are all published in the public information observatory according to regulations 。

`1.` Board of Directors’ Performance Evaluation Implementation Status

In order to implement corporate governance and enhance the functions of the board of directors, the company passed the "Board Performance Evaluation Measures" in 2020. In addition to the performance evaluation at least once a year, the evaluation should be performed by an external professional independent organization or a team of experts and scholars at least every 3 years .

The performance evaluation of the board of directors for this year was completed in January 2021, and the relevant evaluation results and improvement plans were submitted to the board of directors for reference in enhancing the functions of the board in the future.

Evaluation Cycles	Evaluation Period	Evaluation Scope	Evaluation Scope	Evaluation Scope	Evaluation Method	Evaluation Method
Once a year.	1/1/2020~12/13/2020	The scope includes the Board of Directors as a whole, the individual directors, and the member of Audit Committee and Compensation Committee.			Including internal assessment of the Board and self- assessments by each board member.
	Evaluation Aspects
Assess target	Evaluation scope and results
	Index item		Exam topic	Scoring		Evaluation results
Board of Directors	Involvement in the Company’s operation		12	95.00		Better than standard
	Enhancement of the quality of the board’s decision-making		12	100.00		Better than standard
	Makeup and structure of the board		7	100.00		Better than standard
	Election of board members and continuing knowledge development		7	97.14		Better than standard
	Internal controls		7	97.14		Better than standard
Evaluation result description	The performance evaluation indicators of the board of directors include five major aspects, and the evaluation results are all "better than the standard (above 90 points)", indicating that the board of directors has the responsibility to guide and supervise the company's strategy, major business and risk management, and can establish appropriate The internal control system, the overall operation condition is perfect, in line with the requirements of corporate governance

Assess target	Evaluation scope and results	Evaluation scope and results	Evaluation scope and results	Evaluation scope and results
	Index item	Exam topic	Scoring	Evaluation results
Individual directors	Understanding of the Company’s goals and mission	3	98.52	Better than standard
	Awareness of director’s duties	3	100.00	Better than standard
	Involvement in the Company’s operations	8	97.50	Better than standard
	Internal relationship and communication	3	100.00	Better than standard
	Director’s professionalism and continuing knowledge development	3	88.15	Standard
	Internal controls	3	100.00	Better than standard
Evaluation result description	The performance evaluation indicators of board members include six aspects. The evaluation results are "better than the standard (above 90 points)" and 1 item "above the standard (above 80 points to less than 90 points)". The efficiency and effectiveness of the index operation have beenpositivelyevaluated.

Assess target	Evaluation scope and results	Evaluation scope and results	Evaluation scope and results	Evaluation scope and results
	Index item	Exam topic	Scoring	Evaluation results
Audit Committee	Involvement in the Company’s operation	4	98.33	Better than standard
	Awareness of the committee’s duties	5	100.00	Better than standard
	Enhancement of the quality of the committee’s decision-making	7	100.00	Better than standard
	Makeup of the committee and election of its members	3	100.00	Better than standard
	Internal controls	3	100.00	Better than standard
Evaluation result description	The audit committee’s performance evaluation indicators include five major aspects, and the evaluation results are all "better than the standard (above 90 points)", which shows that the overall operation of the audit committee is perfect and meets the requirements of corporate governance,effectivelyenhancingthe functions of the board.
Assess target	Evaluation scope and results
	Index item	Exam topic	Scoring	Evaluation results
Compensation Committee	Involvement in the Company’s operation	4	100.00	Better than standard
	Awareness of the committee’s duties	5	98.67	Better than standard
	Enhancement of the quality of the committee’s decision-making	7	100.00	Better than standard
	Makeup of the committee and election of its members	3	100.00	Better than standard
Evaluation result description	The performance evaluation indicators of the remuneration committee include four major aspects, and the evaluation results are all "better than the standard (above 90 points)", indicating that the overall operation of the remuneration committee is perfect, in line with the requirements of corporate governance, and effectively enhancing the functions of the board of directors.
	Improvement plan
1. Some directors have to travel for a long time due to personal work factors, resulting in lower attendance and training hours than other directors. It is recommended that you can use video or written methods to participate in the resolution of the board of directors in the future; in addition, the training part can be arranged for overseas and local training, and Please provide relevant training certificates so that the company can grasp the essence of their training. 2. At present, the company has not clearly stipulated the succession plan for important management levels, and it is suggested that the following aspects can be handled: (1)Adopt a step-by-step approach to handle the training of cadres at all levels. Through the system to reserve the candidates for the director and deputy directors, build management capabilities and inherit good experience.

(2)Compile annual training plans to meet business needs and handle various professional trainings 。
(3)Regularly handle upgrade assessment matters to promote outstanding talents 。

2. Continuing Education/Training of Directors in 2020
（ 1 ） The major training methods of Directors include ：
- ⚫ The management team briefs the board of directors quarterly on business, regulatory changes and other related information ；
- ⚫ Arrange speeches related to politics, economics, or compliance for directors ；
- ⚫ All directors participate in relevant external training courses provided by themselves as needed 。

Name	Date	Host by	Training/Speech Title	Duration	Total Duration
Zhang, Chang-Ping	2020/09/22	Taiwan Corporate Governance Association	Business Operation and Crisis Management	3.0	6.0
			Insight into the key to hidden financial statements
Zhan, Cai- Yun	2020/09/22	Taiwan Corporate Governance Association	Business Operation and Crisis Management	3.0	6.0
			Insight into the key to hidden financialstatements
Lin, Jun- Ying	2020/09/22	Taiwan Corporate Governance Association	Business Operation and CrisisManagement	3.0	6.0
			Insight into the key to hidden financial statements
Guo, Sheng-Wen	-	-	-	-	0
Wu, Yuan- Sheng	2020/09/22	Taiwan Corporate Governance Association	Business Operation and CrisisManagement	3.0	6.0
			Insight into the key to hidden financialstatements
Jiang, Xiu- Zhen	2020/09/22	Taiwan Corporate Governance Association	Business Operation and Crisis Management	3.0	6.0
			Insight into the key to hidden financialstatements
Zheng, Hui-Rong	2020/09/22	Taiwan Corporate Governance Association	Business Operation and CrisisManagement	3.0	6.0
			Insight into the key to hidden financialstatements
Wu, Si-Yi	2020/09/22	Taiwan Corporate Governance Association	Business Operation and CrisisManagement	3.0	6.0
			Insight into the key to hidden financialstatements
Chen, Zhu- Que	2020/09/22	Taiwan Corporate Governance Association	Business Operation and CrisisManagement	3.0	6.0
			Insight into the key to hidden financialstatements

3.3.2 Corporate Governance Officer

1. The board of directors of the company appointed Ms. Huang, Xiao-Ling, the head of the management department of the company, as the head of corporate governance in 2020. She has more than three years of financial and stock affairs related affairs and is responsible for corporate governance related affairs, including handling the board of directors, audit committees, and remuneration in accordance with the law. Matters related to committee and shareholder meetings; assisting directors in their appointments and continuing education; providing directors with information needed to perform their business; and assisting directors in complying with laws and regulations, etc. 。

2. The first-time director of corporate governance should take at least 18 hours of training within one year from the date of assuming this position, and at least 12 hours of training each year. The training courses should include at least corporate governance topics related to business, legal affairs, finance, accounting, Corporate social responsibility, risk management, internal control and other related courses, the training institutions and methods of training shall be handled in accordance with the relevant provisions of the training system of the directors and supervisors of listed companies jointly stipulated by the stock exchange and the securities counter trading center;

As the head of corporate governance of the company is the first

appointment, it is tentatively arranged to study the relevant courses in 2021 as follows ：

Date	Host by	Training/Speech Title	Duration
2021/03/16	Taiwan Academy of Banking and Finance	Standards and Practices of Directors and Supervisors' Transaction Related Persons	3.0
2021/04/27	Taiwan Corporate Governance Association	Audit committee establishment and operation	3.0
2021/05/11	Taiwan Academy of Bankingand Finance	Operation of Corporate Governance and CompensationCommittee	3.0
2021/05/27	Taiwan Corporate Governance Association	Information Security Incident Handling Practice	3.0

3.3.3 Audit Committee ：

`1.` Function ：

The audit committee of the company was established in 2019 and currently consists of 3 independent directors. The audit committee aims to assist the board of directors in supervising the quality and integrity of the company’s implementation of accounting, auditing, financial reporting processes and financial control; the audit committee The matters considered mainly include ：

➢ Financial Statements
➢ Audit and accounting policies and procedures
➢ Internal control system and related policies and procedures
➢ Significant asset or derivative commodity transactions
➢ Significant fund loan and endorsement or guarantee
➢ Derivative financial products and cash investment situation
➢ Compliance with regulations
➢ Whether the manager and the director have related person transactions and possible conflicts of interest
➢ Appeal report
➢ Fraud prevention plan and fraud investigation report
➢ Information Security
➢ Risk Management
➢ Appraisal of qualifications, independence, and performance of CAPs
➢ Appointment and removal of financial, accounting or internal audit supervisors
➢ The performance of the duties of the audit committee
➢ Self-evaluation questionnaire for performance evaluation of audit committee, etc. 。

2. Annual work summary ：

˙Review financial reports

The board of directors prepared the company's 2020 business report, financial statements, and earnings distribution proposals, among which the financial statements were verified by the entrusted Zhengfeng Certified Public Accountants and issued a verification report. The above-mentioned business report, financial statement and EARNINGS distribution proposal have been 。 checked by the Audit Committee and found that there is no discrepancy.

˙Assess the effectiveness of the internal control system

The audit committee evaluated the effectiveness of the company’s internal control system policies and procedures (including financial, operational, risk management, information security, outsourcing, legal compliance and other control measures), and reviewed the company’s audit department, certified accountants, and management’s regular Report, including risk management and compliance. With reference to the Internal ControlIntegrated Framework (Internal Control-Integrated Framework) issued by The Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013, the Audit Committee believes that the company’s risk management and internal control systems are effective. The company has adopted the necessary control mechanisms to monitor and correct violations.

˙Appointment of CPAs

The audit committee is given the responsibility of supervising the independence of the CPA firm to ensure the fairness of the financial statements. Generally speaking, except for tax-related services or specially approved items, visa accounting firms are not allowed to provide other services of the company. All services provided by the CPA must be approved 。 by the Audit Committee

In order to ensure the independence of certified public accountants, the audit committee formulated an independent evaluation form with reference to Article 47 of the Accountants Act and No. 10 "Integrity, Fairness, Objectivity, and Independence" of the Accountants’ Professional Ethics Bulletin, to assess 、 the independence of accountants. Professional and competency evaluation, to evaluate whether the company is a related person, business or financial interest relationship with the company, etc.

The 5th Audit Committee of the 1st session on February 24, 2020 and the 6th Board of Directors of the 23rd session on February 24, 2020 have reviewed and approved Baker Tilly Clock & Co Certified Public Accountant Zhou Yinlai and Accountant Zeng Guofu to meet the independence assessment 。 standards. Qualified as the company's financial and tax accountant

Audit Committee convened ten meetings in 2020. The Committee members’ attendance status is as follows.

		Attendance in		Attendance Rate (%)	Attendance Rate (%)
Title / Name			By Proxy			Remarks
		Person (B)		【Ｂ/Ａ】

Independent director (convener) Zheng, Hui-Rong		10	0	100.00		2020.5.16 re-elected
Independent director (convener) Wu, Si-Yi		10	0	100.00		2020.5.16 re-elected
Independent director (convener) Chen, Zhu-Que		10	0	100.00		2020.5.16 new appointment
1. Resolutions related to Securities and Exchange Act §14-5：
					Resolution of the Audit
					Committee and the Company’s
Date	Resolution
					response to the Audit

					Committee’s Opinion
2020/02/24	（1） Appoint the Baker Tilly Clock & Co CPAS to sign the 2020 financial reports. （2） Approving 2020 Statement of Internal Control System.
2020/02/25	（1） To maintain contacts with various banks, agree on the financing line to be met by the capital, list all the credit lines, and submit for approval. （2） Provide guarantee and submit for approval to Nankang International Co.Ltd.due to raising financing from the bank. （3） Due to the needs of medium-term funds, the company applied for financing quota to Hua Nan Commercial Bank.
2020/04/14	Approving of the company use the capital of NT$300,000,000 to invest in the stocks of other listed companies.
					The members of the Audit
2020/04/22	Approving of the company use the capital of NT$400,000,000 to invest in the stocks of other listed companies.				Committee unanimously approved all the
					resolutions, and the Board
2020/05/08	Approving of the company's new application for financing line from Huanan Bank due to capital needs.				of Directors approved all such resolutions recommended by the Audit Committee.
2020/06/24	（1） Approving of the company to invest in the stocks of other listed companies at NT$200,000,000. （2） Approving of the company’s application for financing lines to the Shanghai Commercial Savings Bank due to medium-term funding needs.
2020/07/21	Approving of the company to invest in the stocks of other listed companies at NT$200,000,000.
2020/08/10	（1） Approving of the company's application for medium-term financing lines from Hua Nan Commercial Bank. （2） Approving of formulation of the company's "Board Performance Evaluation Measures". （3） Approving of the company to invest in the stocks of other listed companies at NT$200,000,000.

2020/08/11	2020/08/11	（1） Approving of the company's financial statements for the second quarter of 2020. （2） Approved the company's second quarter of 2020 earnings distribution proposal.	（1） Approving of the company's financial statements for the second quarter of 2020. （2） Approved the company's second quarter of 2020 earnings distribution proposal.	（1） Approving of the company's financial statements for the second quarter of 2020. （2） Approved the company's second quarter of 2020 earnings distribution proposal.	（1） Approving of the company's financial statements for the second quarter of 2020. （2） Approved the company's second quarter of 2020 earnings distribution proposal.
2020/11/05		（1） Approving of the company's application to Shanghai Commercial Bank for short-term purchase of materials. （2） Approving of the company’s customers whose accounts receivable exceed the normal credit extension period to be changed to a capital loan case. （3） Approving of the establishment of "Corporate Governance Officer". （4） Approving of the company to invest in the stocks of other listed companies at NT$300,000,000 （5） Approval of the company’s 2021 audit plan declaration form.
2. 3.	There were no other resolutions which was not approved by the Audit Committee but was approved by two thirds or more of all directors in 2020. There were no recusals of independent directors due to conflicts of interests in 2020。 Descriptions of the communications between the independent directors, the internal auditors, and the independent auditors in 2020 (which should include the material items, channels, and results of the audits on the corporate finance and/or operations, etc.)： 1.Communications between Head of Internal Audit： Date Communication focus Form Result 109.2.24 Overview of internal audit work in December 2019 and January 2020. Briefing None 109.5.8 Overview of internal audit work from February to April 2020 Briefing None 109.8.10 Overview of internal audit work from May to July 2020 Briefing None 108.12.5 Overview of internal audit work from August to October 2019. Briefing None 2.Communications between Accountant: Date Communication focus Form Result 109.2.25 2019 financial statement review status Briefing None 109.12.31 The time and scope of the annual report check, the plan for responding to the risk of material false expression, and the matters of high concern. Briefing None

	Date		Communication focus			Form	Result
	109.2.24		Overview of internal audit work in December 2019 and January 2020.			Briefing	None
	109.5.8		Overview of internal audit work from February to April 2020			Briefing	None
	109.8.10		Overview of internal audit work from May to July 2020			Briefing	None
	108.12.5		Overview of internal audit work from August to October 2019.			Briefing	None
	2.Communications between Accountant: Date Communication focus 109.2.25 2019 financial statement review status 109.12.31 The time and scope of the annual report check, the plan for responding to the risk of material false expression, and the matters of high concern.
				Communication focus	Form	Result
				2019 financial statement review status	Briefing	None
				The time and scope of the annual report check, the plan for responding to the risk of material false expression, and the matters of high concern.	Briefing	None

3.3.4 Compensation Committee ：

1.Compensation Committee Members’ Professional Qualifications and Independence Analysis ：

Title		Meets One of the Following Professional	Meets One of the Following Professional	Meets One of the Following Professional												Remarks
		Qualification Requirements,		Together
					Independence Criteria(Note)
		with at Least Five Years’		Work
															Number
		Experience
															of Other
	Criteria	An instructor	A judge, public	Has work	1	2	3	4	5	6	7	8	9	10	Public
		or higher	prosecutor,	experience											Compani
		position in a	attorney, Certified	in the areas											es in
		department of	Public	of											Which
		commerce,	Accountant, or	commerce,											the
		law, finance,	other professional	law,											Individu
		accounting, or	or technical	finance, or											al is
		other academic	specialist who has passed a national	accounting, or otherwise											Concurre ntly
		department ltd t th	examination and b dd	necessary f th											Serving
		reae o e business needs	een aware a certificate in a	or e business of											as an Remuner
		of the	profession	the											ation
		Company in a	necessary for the	Company											Committ
	Name	public or	business of the												ee
		private junior	Company												Member
		college,
		college or
		university
Independe nt director (Convener)	Zheng, Hui-Rong		V	V	V	V	V	V	V	V	V	V	V	V	None	None
Independ ent director	Wu, Si-Yi		V	V	V	V	V	V	V	V	V	V	V	V	None	None
Independ ent director	Chen, Zhu- Que			V	V	V	V	V	V	V	V	V	V	V	None	None

Note: Please tick the corresponding boxes that apply to a member during the two years prior to being elected or during the term(s) of office.
Not an employee of the Company or any of its affiliates.
Not a director or supervisor of affiliated companies. Not applicable in cases where the person is an independent director of the parent company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares.
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 others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company, or ranking in the top 10 in holdings.
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 sub-paragraphs.
Not a director, supervisor, or employee of a corporate shareholder who directly holds 5% or more of the total number of outstanding shares of the Company, or who holds shares ranking in the top five holdings.
Not a director, supervisor, officer, or shareholder holding 5% or more of the shares of a specified company or institution which has a financial or business relationship with the Company.
Not a professional individual, who is an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that provides commercial, legal, financial, accounting services or consultation to the Company or to any affiliate of the Company, or a spouse

thereof.

Not a person of any conditions defined in Article 30 of the Company Law

2.Attendance of Members at Remuneration Committee Meetings ：

（ 1 ） There are 3 members in the Remuneration Committee 。

（ 2 ） A total of 2 (A) Remuneration Committee meetings were held in the previous period.

The attendance record of the Remuneration Committee members was as follows ：

Title	Name	Name	Attendance in Person(B)	By Proxy	Attendance Rate (%)【Ｂ/Ａ】	Attendance Rate (%)【Ｂ/Ａ】	Remarks
Convener	Zheng, Hui- Rong		2	0	100%		2020.05.16 re- elected
Committee Member	Wu, Si-Yi		2	0	100%		2020.05.16 re- elected
Committee Member	Chen, Zhu- Que		2	0	100%		2020.05.16 re- elected

Date		Resolution				Resolution of the Remuneration Committee and the Company’s response to the Audit Committee’s Opinion
109.2.25		`1.`Regularly discuss the company's "Directors, Supervisors and Managers' Salary, Remuneration and Bonus Management Measures"。 `2.`Approved the company's 2019 employee compensation report。				The members of the Audit Committee unanimously approved all the resolutions.
109.11.5		`1.`Regularly discuss the company's "Directors, Supervisors and Managers' Salary, Remuneration and Bonus Management Measures"。 `2.`Approval of the salary review proposal for the "Corporate Governance Director"。				The members of the Audit Committee unanimously approved all the resolutions.
Other mentionable items： 1. If the board of directors declines to adopt or modifies a recommendation of the remuneration committee, it should specify the date of the meeting, session, content of the motion, resolution by the board of directors, and the Company’s response to the remuneration committee’s opinion (eg., the remuneration passed by the Board of Directors exceeds the recommendation of the remuneration committee, the circumstances and cause for the difference shall be specified): None. 2. Resolutions of the remuneration committee objected to by members or subject to a qualified opinion and recorded or declared in writing, the date of the meeting, session, content of the motion, all members’ opinions and the response to members’ opinion should be specified: None.

Taiwan Corporate Governance Implementation as Required by the Taiwan Financial Supervisory Commission ：

			Implementation Status	Non-
				implementati
Evaluation Item
	Yes	No	Abstract Explanation	onand Its

				Reason
1. Does Company follow “Taiwan Corporate Governance Implementation” to establish and disclose its corporate governance practices?	V		Nankang has formulated the Code of Practice for Corporate Governance in accordance with the "Code of Practice for Corporate Governance for Listed OTC Companies" on March 2, 2016, and established relevant regulations on corporate governance at the Public Information Observatory (Corporate Governance→Corporate Governance Structure→Corporate Governance) Rules→Market Type (Listing)→Company Code 2101→Corporate Governance Code of Practice) and the company's website (Investor Area→Corporate Governance→ NankangCorporate Governance Code of Practice)	None
2. Shareholding Structure & Shareholders’ Rights (1) Does Company have Internal Operation Procedures for handling shareholders’ suggestions, concerns, disputes and litigation matters. If yes, has these procedures been implemented accordingly? (2) Does Company possess a list of major shareholders and beneficial owners of these major shareholders. (3) Has the Company built and executed a risk management system and “firewall” between the Company and its affiliates? (4) Has the Company established internal rules prohibiting insider trading on undisclosed information?	V V V V		(1) Nankang has a spokesperson, proxy spokesperson mechanism, interested parties’ mailboxes, shareholders’ question answering windows, etc., and the spokesperson or proxy spokesperson and the stock agency commissioned by the company handle shareholder’s suggestions, doubts, disputes, etc. in a unified manner Matter. (2) Nankang fully grasps the list of major shareholders and their ultimate controllers through registrar, and regularly exposes changes in the shareholding of insiders every month in accordance with laws and regulations, and truly grasps major shareholders. (3) Nankang has, in accordance with relevant laws and regulations, appropriately controlled the risks between the company and related companies and established appropriate firewalls, and the management rights and responsibilities of the assets and finances between the related companies are independent. (4) Nankang has set up the internal regulations of "Management Procedures for Preventing Insider Transactions", which are disclosed on the company's website. (Investor Area→Corporate Governance→Management Procedures for	None

			Preventing Insider Trading and Implementation in Recent Years) This year, relevant education and publicity for directors, managers and employees have been carried out on November 5, 2020 and November 10, 2020. The content includes "Management Procedures for Preventing Insider Trading" and a publicity manual produced by the Taiwan Stock Exchange. And related laws and regulations.
3. Composition and Responsibilities of the Board of Directo (1) Has the Company established a diversification policy for the composition of its Board of Directors and has it been implemented accordingly? (2) Other than the Compensation Committee and the Audit Committee which are required by law, does the Company plan to set up other Board committees? (3) Has the Company established methodology for evaluating the performance of its Board of Directors, on an annual basis, reported the results of performance to the Board of Directors, and use the results as reference for directors’ remuneration and renew (4) Does the Company regularly evaluate its external auditors’ independen	V V V V		(1) Nankang has stipulated in the "Code of Practice on Corporate Governance" that the composition of the board of directors should focus on gender equality and generally possess the knowledge, skills and literacy necessary to perform their duties; out of the 9 current directors, 5 are female directors. All directors have diversified professional backgrounds in business, legal affairs, finance, accounting, etc. (2) In addition to setting up an audit committee and a compensation committee, Nankang also sets up a corporate social responsibility committee, an employee welfare committee, and a labor retirement reserve supervision committee. In the future, various functional committees will be added according to operational needs. (3) Nankang has formulated the "Board Performance Evaluation Method" on August 10, 2020, and conducts performance evaluation regularly every year, and submits the relevant results to the board of directors. The results of the evaluation are used as a reference for remuneration and renewal. (4) Nankang submitted to the board of directors for discussion on February 24, 2020, and in accordance with Article 29 of the "Code of Practice on Corporate Governance", it is necessary to select a professional, responsible and independent certified accountant. A letter from the accounting firm stating that it has not violated its independence. It has been confirmed that the accountant and the	None

		company have no other financial interests or business relationship with the exception of visa and taxation costs.
4. Does the Company appoint competent and appropriate corporate governance personnel and corporate governance officer to be in charge of corporate governance affairs (including but not limited to furnishing information required for business execution by directors, assisting directors’ compliance of law, handling matters related to board meetings and shareholders’ meetings according to law, and recording minutes of board meetings and shareholders’ meetings?	V	Nankang has set up a director of corporate governance on November 5, 2020, responsible for corporate governance affairs, and is co-organized by relevant units.	None
5. Has the Company established a means of communicating with its Stakeholders (including but not limited to shareholders, employees, customers, suppliers, etc.) or created a Stakeholders Section on its Company website? Does the Company respond to stakeholders’ questions on corporate responsibilities?	V	Nankang has established a communication channel (E-mail mailbox and contact number) and has an "investor area" on the website, and an announcement on the "interested parties" and "shareholders' question answering window and stock agency" in the area Communication channels to ensure the smooth communication between the company and the interested parties and their legitimate rights and interests. There is also a "Corporate Social Responsibility Zone" to announce the company's annual corporate social responsibilityreport.	None
6. Has the Company appointed a professional registrar for its Shareholders’ Meetings	V	Nankang have appointed Yuanta as registrar for our Shareholders’ Meeting	None
7. Information Disclosur (1) Has the Company established a corporate website to disclose information regarding its financials, business and corporate governance status? (2) Does the Company use other information disclosure channels (e.g. maintaining an English-language website, designating staff to handle information collection and disclosure, appointing spokespersons, webcastinginvestors conference etc.)?	V V	(1) Nankang discloses financial business and corporate governance information in the "Investor Zone" on the website. (2) In the "Investor Zone" of the website, Nankang discloses financial business and corporate governance information. The company has dedicated personnel to collect and disclose company information, as well as spokespersons and proxy spokespersons, shareholder meetings and legal person briefings, and other related documents in both Chinese and English. The information isplaced on the company	None

website 。

(3) Does the Company announce and report the annual financial statements within two months after the end of the fiscal year, and announce and report the first, second, and third quarter financial statements as well as the operating status of each month before the prescribed deadline?

Has the Company disclosed other information to facilitate a better understanding of its corporate governance practices (e.g. including but not limited to employee rights, employee wellness, investor relations, supplier relations, rights of stakeholders, directors’ training records, the implementation of risk management policies and risk evaluation measures, the implementation of customer relations policies, and purchasing insurance for directors)

(3) The company completes the announcement and declaration on the day the board of directors passes the financial report. The financial reports for the first to third quarters of 2020 have been announced and declared on the same day that the board of directors passed on May 8, August 11, and November 5, 2020; and the revenue of each month will be reported in the next Completed before the 10th of the month.
(1) Employee rights and employee wellness: The company strictly abides by various labor laws and regulations, and has various care systems, welfare systems, and communication and care channels as a way to retain talents. In addition, it invests in education and training funds every year to plan a complete education system , As the policy of cultivating talents, a performance appraisal system is set up, as a method of using talents, to provide employees with full space for use, effectively link employees with the company, and promote the sustainable development of the company
(2) Investor relations: The company has spokespersons and agency spokespersons, and unimpeded contact information, investors can express their opinions at any time.
(3) Directors’ training records: The directors and supervisors of the company have industry professional background and practical experience, and the company provides relevant regulatory information to directors and supervisors at any time, and arranges directors to participate in corporate governance courses from time to time every year, and exposes them at the public information observatory.
(4) Risk Management Policies and Risk Evaluation: The company formulates internal control system and various internal management regulations in accordance with the law to control risks
(5) Customer Relations Policies: The company has an official website with a dedicated service area, where you can inquire about the company's sales locations and have a service phone number and mailbox. A dedicated person is

				responsible for assisting customers in handling problems and protecting customer rights. (6) Nankang maintains D&O Insurance for its directors and officers.	responsible for assisting customers in handling problems and protecting customer rights. (6) Nankang maintains D&O Insurance for its directors and officers.
9. The improvement status for the result of Corporate Governance Evaluation announced by Taiwan Stock Exchange				(1) According to the results of the corporate governance evaluation, the main improvement and completion projects include: setting up a corporate governance supervisor, increasing the disclosure of information on the company website, strengthening the training of directors, and strengthening the implementation of corporate social responsibility, etc. (2) In the future, Nankang will focus on the two aspects of "protecting the rights and interests of shareholders and treating shareholders equally" and "strengthening the structure and operation of the board of directors", such as implementing a succession system, uploadingfinancial reports earlier, etc.
Social Responsibility Implementation Status as Required by the Taiwan Financial Supervisory Commission:
Evaluation Item	Implementation Status				Non-
					implementat
	Yes	No	Abstract Explanation		ionand Its
					Reason

1. Does the Company follow materiality principle to conduct risk assessment for environmental, social and corporate governance topics related to company operation, and establish risk management related policyor strategy?	V		The highest risk management unit of Nankang is the board of directors, and the relevant risk management strategies are formulated in accordance with the "Nankang Tire Company Governance Code of Practice".		None

Social Responsibility Implementation Status as Required by the Taiwan Financial Supervisory Commission:

2. Does the Company have a dedicated (or ad-hoc) CSR organization with Board of Directors authorization for senior management, which reports to the Board of Directors?	V		Nankang established the "Corporate Social Responsibility Unit" in 2015, with the management department concurrently serving as the dedicated unit, and has formulated the "Corporate Social Responsibility Code of Practice". According to this code, it is responsible for the planning and implementation of corporate social responsibility related strategies and systems. Review and improve topromote implementation.	None
3. Environmental Topic (1) Has the Company set an environmental management system designed to industry characteristics? (2) Is the Company committed to improving resource efficiency and to the use of renewable materials with low environmental impact? (3) Does the Company evaluate current and future climate change potential risks and opportunities and take measures related to climate related topics? (4) Does the Company collect data for greenhouse gas emissions, water usage and waste quantity in the past two years, and set energy conservation, greenhouse gas emissions reduction, water usage reduction and other waste management policies?	V V V V		(1) Nankang has obtained ISO14001 environmental management system certification in 1997, and OHSAS18001 and CNS15506 environmental management certifications in March 2013, fulfilling its commitment to environmental policies. Nankang also has an environmental management unit specialized in the work safety room, and special personnel are also responsible for the environmental maintenance and management of air pollution, water pollution, and waste water.。 (2) Nankang cooperates with suppliers to recycle waste wood pallets and packaging materials to achieve the purpose of waste reduction。 (3) In response to the government's promotion of a green environment, Nankang has successively installed solar panels for power supply since 2019 (the annual power generation is expected to reach 2.4 million kWh); and actively promotes the digitalization of documents to reduce resource consumption. (4) The Xin-feng plant's greenhouse gas emissions in 2020 and 2019 have been verified by the British Standards Institute (BSI) in accordance with the verification criteria of ISO 14064-1/CNS 14064-1. The total greenhouse gas emissions in 2019 will be 67,307.826 tons, and the emissions in 2020 will be 55,849.890 tons, an annual reduction of about 17.02%。	None

4. Social Topic (1) Does the Company set policies and procedures in compliance with regulations and internationally recognized human rights principles?？ (2) Has the Company established appropriately managed employee welfare measures (include salary and compensation, leave and others), and link operational performance or achievements with employee salary and compensation (3) Does the Company provide employees with a safe and healthy working environment, with regular safety and health training? (4) Has the Company established effective career development training plans? (5) Does the Company’s product and service comply with related regulations and international rules for customers’ health and safety, privacy, sales, labelling and set polices to protect consumers’ rights and consumer appeal procedures? (6) Does the Company set supplier management policy and request suppliers to comply with related standards on the topics of environmental, occupational safety and health or labor right, and their implementation status?	V V V V V V		(1) Nankang abides by relevant labor laws and regulations such as the Labor Standards Law, and formulates various management measures to protect the rights and interests of employees and institutionalize various internal operations of the company。 (2) Nankang clearly prescribes various employee welfare measures in its work regulations, and places relevant measures on Nankang's internal website, and regularly discusses and revises employee welfare measures with labor unions and welfare committees. Every year and in accordance with the company's articles of association, 0.1% of the profit is allocated as employee remuneration。 (3) Nankang implements the OHSAS18001&CNS15506 system, provides a good working environment, and regularly implements employee health inspections and safety and hygiene education and training。 (4) Nankang regularly organizes various planning trainings for employees, including: new employee training, job category training, class management training, etc., and formulates rotation plans for various job categories to cultivate employees' professional and diversified career capabilities。 (5) Nankang attaches great importance to customer after-sales service, and has a number of customer complaint channels and standard operating procedures for customer complaint handling. The marketing and labeling of products and services are handled in accordance with relevant laws and regulations and international standards。 (6) Nankang has established relevant management strategies for suppliers, and uses a regular supplier evaluation system to exclude suppliers who have concerns about environmental protection, occupational safety and health, or labor rights.。	None

5. Does the Company refer to international reporting rules or guidelines to publish CSR Report to disclose non-financial information of the Company? Has the said Report acquire 3rd certification party verification or statement of assurance?	V		Nankang has completed the preparation of its corporate social responsibility report in 2020, which was reviewed and verified by the BSI British Standards Institute as a moderate assurance level based on the AA1000 assurance standard (2008).	None
6. If the company has established its corporate social responsibility code of practice according to “Listed Companies Corporate Social Responsibility Code of Practice,” please describe the operational status and differences: Nankang has formulated the "Code of Practice for Corporate Social Responsibility of Listed Companies" on November 9, 2016, and there is no difference in operation。
7. Other important information to facilitate better understanding of the company’s implementation of corporate social responsibility: (1) Environmental protection: Thoroughly implement energy conservation and industrial waste reduction, strengthen reduction, recycling, and reuse programs to improve resource use efficiency, and pass environmental management certifications, such as: ISO14001, OHSAS18001, CNS15506 and other environmental management certifications, ISO9001 quality certification, ISO16949, E- MARK, 3C... etc.。 (2) Social welfare：Responding to government laws and hiring physically and mentally handicapped employees in accordance with the Law on the Protection of the Rights and Interests of the Handicapped。 (3) Consumer rights: Nankang communicates with customers in a timely manner in response to customer complaints, and holds meetings for major customer complaints to review and improve。

Taiwan Corporate Conduct and Ethics Implementation as Required by the Taiwan Financial SupervisoryCommission

	Implementation Status	Implementation Status	Implementation Status	Non-
Evaluation Item				implementationand
	Yes	No	Abstract Explanation
				Its Reason

1. Establishment of Corporate Conduct and Ethics Policy and Implementation Measures (1) Does the company have a clear ethical corporate management policy approved by its Board of Directors, and bylaws and publicly available documents addressing its corporate conduct and ethics policy and measures, and commitment regarding implementation of such policy from the Board of Directors and the top management team? (2) Whether the company has established an assessment mechanism for the risk of unethical conduct; regularly analyzes and evaluates within a business context, the business activities with a higher risk of unethical conduct; has formulated a program to prevent unethical conduct with a scope no less than the activities prescribed in paragraph 2, Article 7 of the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies? (3) Whether the company has established relevant policies that are duly enforced to prevent unethical conduct, provided implementation procedures, guidelines, consequences of violation and complaint procedures, and periodically reviews and revises such policies?	V V V		(1) Nankang has formulated the "Code of Integrity Management" and "Code of Practice in Corporate Governance" to regulate the business philosophy that the board of directors and senior management should abide by in the execution of business, and they are disclosed on the company website (Investor Area→Corporate Governance→Nankang Corporate Governance Code of Practice). (2) Nankang clearly stipulates the integrity behavior clauses in the supplier dealing contracts, and regularly conducts supplier evaluations, and lists unqualified manufacturers as rejected customers. In addition, Nankang also formulated the "Operating Procedures and Behavior Guidelines for Honest Business Operations", which set out dishonest behaviors and handling procedures as preventive measures. The content covers Article 7 Item 2 of the "Code of Integrity Business Operations for Listed Companies。 (3) Nankang has clarified regulations in the "Work Rules" and "Integrity Management Operating Procedures and Behavior Guidelines" to strictly prohibit dishonest behaviors, implement relevant operations, and review and revise them regularly.	None

2. Ethic Management Practice (1) Whether the company has assessed the ethics records of whom it has business relationship with and include business conduct and ethics related clauses in the business contracts? (2) Whether the company has set up a unit which is dedicated to promoting the company’s ethical standards and regularly (at least once a year) reports directly to the Board of Directors on its ethical corporate management policy and relevant matters, and program to prevent unethical conduct and monitor its implementation? (3) Whether the company has established policies to prevent conflict of interests, provide appropriate communication and complaint channels and implement such policies properly? (4) To implement relevant policies on ethical conducts, has the company established effective accounting and internal control systems, audit plans based on the assessment of unethical conduct, and have its ethical conduct program audited by internal auditors or CPA periodically? (5) Does the company provide internal and external ethical conduct training programs on a regular basis?	V V V V V		(1) Nankang and its counterparties have signed a letter of integrity undertaking, and in the contract, the integrity behavior clause is clearly stipulated. If there is a violation, the contract will be terminated and compensated, and it will be classified as a refusal account. (2) Nankang’s Management Department is responsible for promoting the company’s integrity management objectives and policies, and the relevant units of corporate governance formulate preventive plans, and the audit team conducts regular internal audits and reports to the board of directors (3) Nankang's "Integrity Management Operating Procedures and Behavior Guidelines" has clearly formulated a policy to prevent conflicts of interest. The "Stakeholders" section of the "Investors Zone" of the company's website provides appropriate external statement channels and implements them. Internal rules There is a reporting mailbox, which is handled exclusively by relevant units. (4) Nankang formulates accounting system and internal control system in accordance with relevant laws and regulations, and the audit team draws up an audit plan, regularly checks its compliance, and reports to the board of directors (5) New recruits in Nankang will arrange integrity management education and training when they take up their posts, and incumbents will promote integrity management related matters at regular supervisor meetings and departmental internal meetings	None

3. Implementation of Complaint Procedures (1) Does the company establish specific complaint and reward procedures, set up conveniently accessible complaint channels, and designate responsible individuals to handle the complaint received? (2) Whether the company has established standard operation procedures for investigating the complaints received, follow-up measures after investigation are completed, and ensuring such complaints are handled in a confidential manner? (3) Does the company adopt proper measures to prevent a complainant from retaliation for his/her filinga complaint?	V V V	(1) Nankang has clearly stipulated the reporting and reward system in the "Guidelines for Integrity Management Operation Procedures and Behaviors" and "Work Rules", and has set up reporting channels for "Stakeholders" in the "Investors Zone" of the company's website to provide personnel to report dishonest acts , After filing the case, a dedicated unit will be assigned to handle it. (2) Nankang has established reporting procedures and a confidentiality mechanism in the "Ethical Business Procedures and Behavior Guidelines" and other systems (3) Nankang adopts confidentiality and protection measures for the informant to avoid improper handling	None
4. Information Disclosure Does the company disclose its guidelines on business ethics as well as information about implementation of such guidelines on its website and Market Observation Post System (MOPS)?	V	Nankang has set up the "Code of Integrity Management" and disclosed it on the company website (Investor Area→Corporate Governance→Code of Integrity Management)	None
5. If the company has established corporate governance policies based on Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, please describe any discrepancy between the policies and their implementation: Nankang has set up the "Integrity Management Code" and "Integrity Management Operation Procedures and Behavior Guidelines", and follow the relevant regulations. There is no difference between the operation and the code.
六、Other important information to facilitate better understanding of the company’s corporate conduct and ethics compliance practices (e.g., review the company’s corporate conduct and ethics policy): (1) Nankang abides by the relevant laws and regulations of the competent authorities such as the Company Law and the Securities Exchange Law as the basis for the implementation of integrity management。 (2) Nankang's "Regulations of Board Meeting Procedures" stipulates that directors who have an interest in meeting matters with themselves or the legal person they represent, which may be harmful to the interests of the company, may state their opinions and answer inquiries, and shall not participate in discussion and voting, and when discussing and voting Should be evaded, and may not act for other directors to exercise their voting rights.

If the company has established corporate governance policies based on Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, please describe any discrepancy between the policies and their implementation:

Nankang has set up the "Integrity Management Code" and "Integrity Management Operation Procedures and Behavior Guidelines", and follow the relevant regulations. There is no difference between the operation and the code.

六、 Other important information to facilitate better understanding of the company’s corporate conduct and ethics compliance practices (e.g., review the company’s corporate conduct and ethics policy): (1)[Nankang abides by the relevant laws and regulations of the competent authorities such as the Company Law and the Securities Exchange Law as the basis for the implementation of integrity ] management 。 (2)[Nankang's "Regulations of Board Meeting Procedures" stipulates that directors who have an interest in meeting matters with themselves or the legal person they represent, which may be ] harmful to the interests of the company, may state their opinions and answer inquiries, and shall not participate in discussion and voting, and when discussing and voting Should be evaded, and may not act for other directors to exercise their voting rights.

Internal Control System Execution Status

1.Statement of Internal Control System

Nankang Rubber Tire Corp., Ltd. Statement of Internal Control System

February 08, 2021

Based on the findings of a self-assessment, Nankang Rubber Tire Corp., Ltd. (Nankang) states the following with regard to its internal control system during the year 2020 ：

Nankang’s Board of Directors and management are responsible for establishing, implementing, and maintaining an adequate internal control system. Internal control system is designed to provide reasonable assurance over the effectiveness and efficiency of our operations (including profitability, performance and safeguarding of assets), reliability, timeliness, transparency and regulatory compliance of our reporting, and compliance with applicable rulings, laws and regulations.
An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can provide only reasonable assurance of accomplishing its stated objectives. Moreover, the effectiveness of an internal control system may be subject to changes due to extenuating circumstances beyond our control. Nevertheless, our internal control system contains self-monitoring mechanisms, and Nankang takes immediate remedial actions in response to any identified deficiencies.
Nankang evaluates the design and operating effectiveness of its internal control system based on the criteria provided in the Regulations Governing the Establishment of Internal Control Systems by Public Companies (herein below, the “Regulations”). The criteria adopted by the Regulations identify five key components of managerial internal control: (1) control environment, (2) risk assessment, (3) control activities, (4) information and communication, and (5) monitoring activities. Each component also includes several items which can be found in the Regulations.
Nankang has evaluated the design and operating effectiveness of its internal control system according to the aforesaid Regulations.
Based on the findings of such evaluation, Nankang believes that, on December 31, 2020, it has maintained, in all material respects, an effective internal control system (that includes the supervision and management of our subsidiaries), to provide reasonable assurance over our operational effectiveness and efficiency, reliability, timeliness, transparency and regulatory compliance of reporting, and compliance with applicable rulings, laws and regulations.
This Statement is an integral part of Nankang’s annual report and prospectus, and will be made public. Any falsehood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Law.
This Statement was passed by the Board of Directors in their meeting held on February 08, 2021, with none of the eight attending directors expressing dissenting opinions, and the remainder all affirming the content of this Statement.

Nankang Rubber Tire Corp., Ltd. Chairman Zhang, Chang-Ping President Zhan, Cai-Yun

2.If CPA Was Engaged to Conduct a Special Audit of Internal Control System, Provide Its Audit Report:None

In the most recent year and as of the publication date of the annual report, the company and its internal personnel have been punished in accordance with the law, or the company has imposed penalties on its internal personnel for violations of the internal control system, and the results of the penalties may have a significant impact on shareholder rights or securities prices. Its punishment content, main deficiencies and improvement situation ： None

Major Decisions of Shareholders’ Meeting and Board Meetings

1.Major Resolutions of Shareholders’ Meeting and Implementation Status ： (May 13,2020 9am)

	Proposals and resolutions	Implementation status
Report	Employee compensation distribution report for 2020	◼ Nankang's 2020 employee compensation amounted to NT$1,275,670, which has been fully paid in cash on October 20,2020.
	Earnings distribution report for 2020	◼ Nankang distributed a cash dividend of NT$401,124,452 in the first half of 2019 (NT$0.50 per share), which was fully paid on September 4, 2019 in accordance with the resolution of the board of directors。 ◼ Nankang distributed a cash dividend of NT$601,686,678 in the second half of 2019 (NT$0.50 per share), which was fully paid on March 25, 2020 in accordance with the resolution of the board of directors
Discuss	The 2019 Business Report and Financial Statement	◼ Prepare a record of the proceedings according to the approved content and upload it to the stock exchange website。
	Approving of amendments to some articles of the company's articles	◼ Approved by the Ministry of Economic Affairs for registration on June 10, 2020, and announced on the company's website.
	Approving of the amendment to the company's "Measures for External Endorsement Guarantee"	◼ Reported to the Public Information Observatory on May 13, 2020。

2.Major Resolutions of Board Meetings

Date	Major Resolutions	status
February 24, 2020	1. Approving of self-closing financial statements for the 2019. 2. Approving of the appointment of Baker Tilly Clock & Co CPAs to handle the 2020 financial statements. 3. Approving of the 2020 Internal Control System Statement. 4. Approval of amendments to certain provisions of the company's articles of association. 5. Approving of amendments to some provisions of the Board of Directors Rules of Procedure. 6. Approving of the revision of some provisions of the audit committee's organizational rules. 7. Approving the revision of some provisions of the Organizational Rules of the Compensation Committee.	All present directors approved

February 25, 2020	1. Approving of employee compensation for 2019. 2. Approving of the 2019 financial statements. 3. Approving of 2019 EARNINGS distribution. 4. Approved the 2019 ex-dividend base date.
April 14, 2020	1. Approving of the company use the capital of NT$300,000,000 to invest in the stocks of other listed companies.
April 22, 2020	1. Approved the establishment of Nankang Yisheng Property Management Consulting Co., Ltd. as a joint venture between Nankang and Singapore Yisheng Property Management Consulting Co., Ltd. 2. Approving of the company use the capital of NT$400,000,000 to invest in the stocks of other listed companies.
May 08, 2020	1. Approving of the company's new application for financing line from Huanan Bank due to capital needs.
June 24, 2020	1. Approving of the company to invest in the stocks of other listed companies at NT$200,000,000. 2. Approving of the company’s application for financing lines to the Shanghai Commercial Savings Bank due to medium-term funding needs.
July 21, 2020	1. Approving of the company to invest in the stocks of other listed companies at NT$200,000,000.
Aug. 10, 2020	1. Approving of the company's application for medium-term financing lines from Hua Nan Commercial Bank. 2. Approving of formulation of the company's "Board Performance Evaluation Measures". 3. Approving of the company to invest in the stocks of other listed companies at NT$200,000,000.
Aug. 11, 2020	1. Approving of the company's financial statements for the second quarter of 2020. 2. Approved the company's second quarter of 2020 earnings distribution proposal.

Nov. 11, 2020	1. Approving of the company's application to Shanghai Commercial Bank for short- term purchase of materials. 2. Approving of the company’s customers whose accounts receivable exceed the normal credit extension period to be changed to a capital loan case. 3. Approving of the establishment of "Corporate Governance Officer". 4. Approving of the company to invest in the stocks of other listed companies at NT$300,000,000 5. Approval of the company’s 2021 audit plan declaration form.
	Major Issues of Record or Written Statements Made by Any Director Dissenting to Important Resolutions Passedby the Board of Directors during 2020 and as of the Date of this Annual Report:None

Resignation or Dismissal of Chairman, President, and Heads of

Accounting, Finance, Internal Audit, Corporate Governance Officer and R&D during 2020 and as of the Date of this Annual Report:

				March 31, 2021
Title	Name	Date of Appointment	Date of Termination	Reasons for Resignation or Dismissal
Chief Internal Auditor	Yan, Shi- Zhang	May 29, 2015	January 3, 2021	Retirement

一、 Information Regarding the Company’s Audit Fee and

Independence

Audit Fee

Accounting Firm	Name	of CPA	Period Covered by CPA’s Audit	Remarks
Baker Tilly Clock & Co	Chou, Ying- Lai	Tseng, Kuo-Fu	2020.01.01~2020.12.31

Unit ： NT Dollars

Fee Items Fee Range	Fee Items Fee Range	Audit Fee	Non-audit Fee	Total
1	Under NT$ 2,000,000
2	NT$2,000,001 ~ NT$4,000,000
3	NT$4,000,001 ~ NT$6,000,000	5,665	60	5,725
4	NT$6,000,001 ~ NT$8,000,000
5	NT$8,000,001 ~ NT$10,000,000
6	Over NT$100,000,000

二、 Replacement of CPA: None

三、 Audit Independenc: The Company’s Chairman, Chief Executive Officer,

Chief Financial Officer, and managers in charge of its finance and accounting operations did not hold any positions in the Company’s independent auditing firm or its affiliates during 2020.

四、 Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders

Unit: Shares

		2020	2020	As of March 13,2021	As of March 13,2021
Title	Name	Holding Increase	Pledged Holding Increase	Holding Increase	Pledged Holding Increase	Marks
		(Decrease)	(Decrease)	(Decrease)	(Decrease)
Chairman	Quanye Investment Co., Ltd.	545,000	(6,145,000)	0	2,570,000
Representative	Zhang,Chang-Ping	0	0	0	0
Director	Quanye Investment Co., Ltd.	0	0	0	0
Representative	Zhan,Cai-Yun	0	0	0	0
Director	Quanye Investment Co., Ltd.	0	0	0	0
Representative	Lin,Jun-Ying	0	0	0	0
Director	Quanye Investment Co., Ltd.	0	0	0	0
Representative	Guo,Sheng-Wen	0	0	0	0
Director	Quanye Investment Co.,Ltd.	0	0	0	0

Representative	Wu,Yuan-Sheng	0	0	0	0

	Quanye Investment Co.,Ltd.	0	0	0	0
Director		(50,000)	0	0	0	dismissed on Nov. 13,
	Jiang, Xiu-Zhen	0	0	0	0	2020
Representative
	Jiang, Qing-Xing					assume on Nov. 13,

						2020
President	Zhan, Cai-Yun	0	0	0	(1,000,000)
Vice President	Peng,Tian-Cheng	0	0	0	0
Manager	Guo,Mei-Hang	(20,000)	0	0	0
Director	Hong,Jian-Zhong	0	0	0	0
Director	Wu,Yuan-Sheng	(30,000)	0	(70,000)	0
Major Shareholders	NanGuan Rubber Tire Corp. Ltd.	9,589,000	14,225,000	0	(3,100,000)
Major Shareholders	Yuanre Development Co., Ltd.	(490,000)	940,000	0	0	109/09/30解任
Independent director	Zheng,Hui-Rong	0	0	0
Independent director	Wu,Si-Yi	0	0	0
Independent director	Chen,Zhu-Que	0	0	0	0
Head of Finance Dept.	Guo,Mei-Hang	0	0	0	0
Head of AccountingDept.	Guo,Mei-Hang	0	0	0	0
Head of Corporate Governance	Huang, Xiao-Ling	(4,000)	0	0	0	110/11/05就任

五、 Relationship among the Top Ten Shareholders

March 13, 2021 Shares ； %

					Shareholding	Shareholding
			Spouse’s/minor’s				Name and Relationship Between the Company’s Top Ten
	Current Shareholding				by Nominee
			hhli				Shareholders, or Spouses or Relatives Within Two Degrees
Name			Sareodng		Arrangement					Remarks

				%		%
	Shares	%	Shares		Shares		Name	Relationship

NanGuan Rubber Tire Corp. Ltd.	151,228,285	18.13%		-		-		Director of
			-		-		Lin, Jun-Ying			None
Chairman: Zhang, Yue-Yiao	-	0.00%						Nankuan Rubber Tire Corp.	Ltd.

				-		-
Yuanhung Development Co., Ltd.	82,007,468	9.83%						Chairman of
			-		-		Jiang Ming-Dong			None
Chairman: Jiang, Ming-Dong	-	0.00%					,	Quanye Investment Co., Ltd.

Yuanre Development Co., Ltd.	81,605,324	9.79%		-		-		Chairman of
			-		-		Wang Zhong-Zheng			None
Chairman: Wang Zhong-Zheng	175,617	0.02%						Zhikai Development Co., Ltd

Zhikai Development Co., Ltd	78,835,863	9.45%		-		-		Chairman of
			-		-		Wang Zhong-Zheng			None
Chairman:Wang Zhong-Zheng	175,617	0.02%						Yuanre Development Co., Ltd.

Quanye Investment Co., Ltd.	33,941,666	4.07%		-		-		Chairman of
Chairman: Jiang, Ming-Dong	-	0.00%	-		-		Jiang, Ming-Dong	Yuanhung Development Co.,		None
								Ltd.
Lin, Jun-Ying	18,933,571	2.27%	-	-	-	-	NanGuan Rubber Tire Corp. Ltd.	Director		None
Yi-Gui investment Co., Ltd.	15,055,000	1.81%		-		-
			-		-		None	None		None
Chairman: Luo, Da-Wei	-	0.00%

Guo, Qiang-Da Technology Co., Ltd.	10,055,731	1.21%		-		-
			-		-		None	None		None
Chairman: Lai, San-Zhao	2,025	0.00%

				-		-
Vanguard Emerging Markets Stock Index Fund, a series of
	9,593,390	1.15%	-		-		None	None		None
Vanguard International Equity Index Funds


JPMorgan Chase Bank N.A.，Taipei Branch in custody				-		-
for Vanguard Total International Stock Index Fund，a	8,810,745	1.06%	-		-		無	無		None
series ofVanguard Star Funds

六、 Investment Ownership

vestment Ownership
					March 13, 2021 Unit: Shares；%

			Ownership by Directors, Managers
	Ownership by Nankang		and Directly/Indirectly Owned		Total Ownership
			Subsidiaries
Investment


	Shares	%	Shares	%	Shares	%

Taipei NanHung Rubber Tire Corp. Ltd.	900,000	100.00	-	-	900,000	100.00
NanGuan Rubber Tire Corp. Ltd.	549,994	20.37	-	-	549,994	20.37
Nanzong Construction Developments, Co.,Ltd.	178,500,000	100.00	-	-	178,500,000	100.00
Nankang Rubber Tire (Singapore) Pte. Ltd.	SGD45,982,196	100.00	-	-	SGD45,982,196	100.00
Nankang International Co.Ltd	USD80,780,000	100.00	-	-	USD80,780,000	100.00
Nankang Tire Netherlands B.V	EUR60,000	100.00	-	-	EUR60,000	100.00
Nankang Yi-Sheng property management Co.,Ltd	200,000	40.00	-	-	200,000	40.00

註：係公司採用權益法之投資。

III.Capital Overview

1. Capital and Shares

(1) Capitalization

						March 13, 2021	March 13, 2021
Date	Face Value Per Share	Authorized	Share Capital	Capital Stock		Remark

		Shares	Amount	Shares	Amount	Sources of Capital	Capital Increase by Assets Other than Cash	Remarks
37/01	100.00	450.00	45000.00	225.00	22500.00	established
38/02	100.00	450.00	45000.00	450.00	45000.00	seasoned equity offering
39/03	100.00	675.00	67500.00	675.00	67500.00	seasoned equity offering
43/05	100.00	1000.00	100000.00	1000.00	100000.00	seasoned equity offering
43/08	50.00	2000.00	100000.00	2000.00	100000.00	Changed face value
47/10	50.00	2200.00	110000.00	2200.00	110000.00	capital increase out of earnings and capital reserves
51/08	50.00	2420.00	121000.00	2420.00	121000.00	capital increase outofearnings
52/05	50.00	3660.00	183000.00	3660.00	183000.00	seasoned equity offering
52/07	50.00	4144.00	207200.00	4144.00	207200.00	capital increase outofearnings
53/07	50.00	4703.60	235180.00	4703.60	235180.00	capital increase outofearnings
54/07	50.00	7200.00	360000.00	4938.78	246939.00	capital increase outofearnings
55/03	50.00	7200.00	360000.00	6600.00	330000.00	seasoned equity offering
55/07	50.00	7200.00	360000.00	7000.00	350000.00	capital increase outofearnings
56/07	50.00	7420.00	371000.00	7420.00	371000.00	capital increase outofearnings
56/12	50.00	10420.00	521000.00	10420.00	521000.00	seasoned equity offering
57/07	50.00	11384.60	569230.00	11384.60	569230.00	capital increase out of earnings and capital reserves
58/05	10.00	74322.99	743229.90	74322.99	743229.90	seasoned equity offering, capital increase out of earnings and capital reserves
59/06	10.00	81280.00	812800.00	81280.00	812800.00	capital increase outofearnings

						and capital reserves
60/07	10.00	100000.00	1000000.00	87782.40	877824.00	capital increase out of earnings and capital reserves
61/03	10.00	100000.00	1000000.00	92782.40	927824.00	seasoned equity offering
62/08	10.00	100000.00	1000000.00	94638.05	946380.48	capital increase out of capital reserves
65/03	10.00	100000.00	1000000.00	100000.00	1000000.00	seasoned equity offering
66/04	10.00	150000.00	1500000.00	112500.00	1125000.00	seasoned equity offering
68/06	10.00	150000.00	1500000.00	129375.00	1293750.00	seasoned equity offering
74/10	10.00	150000.00	1500000.00	135843.75	1358437.50	capital increase out of capital reserves
75/05	10.00	238800.00	2388000.00	173880.00	1738800.00	capital increase out of earnings and capital reserves
76/08	10.00	238800.00	2388000.00	208656.00	2086560.00	capital increase out of capital reserves
77/07	10.00	320000.00	3200000.00	260820.00	2608200.00	capital increase out of earnings and capital reserves
80/07	10.00	320000.00	3200000.00	148667.40	1486674.00	Capital reduction
81/08	10.00	320000.00	3200000.00	260820.00	2608200.00	seasoned equity offering
84/07	10.00	480000.00	4800000.00	359228.00	3592280.00	capital increase out ofearnings
85/08	10.00	600000.00	6000000.00	520880.60	5208806.00	capital increase out ofearnings
86/05	10.00	1000000.00	10000000.00	677144.78	6771447.80	capital increase out ofearnings
100/06	10.00	1000000.00	10000000.00	717773.47	7177734.70	capital increase out ofearnings
100/10	10.00	1000000.00	10000000.00	720446.84	7204468.40	Convertible bond
101/10	10.00	1000000.00	10000000.00	878945.14	8789451.40	capital increase out of earnings and capital reserves
102/08	10.00	1000000.00	10000000.00	879893.90	8798939.00	Convertible bond
103/10	10.00	1000000.00	10000000.00	844922.90	8449229.00	Decrease in treasury stock
104/02	10.00	1000000.00	10000000.00	833934.90	8339349.00	Decrease in treasury stock	註14

Composition of Shareholders

	March 13, 2021	March 13, 2021	March 13, 2021
Type of Stock	Authorized Share Capital
	Listed Shares	Unissued Shares	Total
Common Stock	833,934,904	166,065,096	1,000,000,000

Composition of Shareholders

March 13, 2021

					Foreign
Type of	Government	Financial	Other Juridical	Domestic	Institutions
						Total
Shareholders	Agencies	Institutions	Persons	Natural Persons	and Natural

					Persons
Number of Shareholders	4	4	124	30,542	142	30,816
Shareholding	1,707,483	146,213	501,944,441	278,913,587	51,223,180	833,934,904
Shareholding Percentage	0.20	0.01	60.19	33.45	6.14	100.00

Distribution of Shareholding

March 13, 2021


Shareholding Range	Number of Shareholders	Shareholding	Shareholding Percentage

1-999	12,316	3,652,752	0.44
1,000-5,000	12,343	27,503,785	3.30
5,001-10,000	2,656	19,757,374	2.37
10,001-15,000	1,013	12,659,731	1.52
15,001-20,000	618	11,218,894	1.35
20,001-30,000	554	13,872,146	1.66
30,001-50,000	471	18,639,949	2.24
50,001-100,000	421	29,569,812	3.55
100,001-200,000	223	31,085,837	3.73
200,001-400,000	89	24,846,239	2.98
400,001-600,000	37	18,214,550	2.18
600,001-800,000	18	12,175,009	1.46
800,001-1,000,000	11	9,907,209	1.19
Over 1,000,001	46	600,831,617	72.05
Total	30,816	833,934,904	100.00

Major Shareholders

March 13, 2021

		Shareholding
Major Shareholders	Shareholding
		Percentage

NanGuan Rubber Tire Corp. Ltd.	151,228,285	18.13%
YuanhungDevelopment Co., Ltd.	82,007,468	9.83%
Yuanre Development Co., Ltd.	81,605,324	9.79%
Zhikai Development Co., Ltd	78,835,863	9.45%
Quanye Investment Co., Ltd.	33,941,666	4.07%
Lin, Jun-Ying	18,933,571	2.27%
Yi-Gui investment Co., Ltd.	15,055,000	1.81%
Guo, Qiang-Da TechnologyCo., Ltd.	10,055,731	1.21%
Vanguard Emerging Markets Stock Index Fund, a series of Vanguard International Equity Index Funds
	9,593,390	1.15%

JPMorgan Chase Bank N.A.，Taipei Branch in custody for Vanguard Total International Stock Index Fund，a series of Vanguard Star Funds
	8,810,745	1.06%

Market Price, Net Worth, Earnings, and Dividends Per Common Share

	item	2019	2020	01/01/2021-04/09/2021
Market Price Per Share	Highest Market Price	59.40	53.10	43.85
	Lowest Market Price	25.00	34.20	37.15
	Average Market Price	38.53	43.78	40.98
Net Worth Per Share	Before Distribution	12.84	12.94	12.94
	After Distribution	12.12	12.36	--
Earnings Per Share	Weighted Average Shares	802,248,904	802,248,904	--
	Earnings Per Share	1.42	1.05	--
	Diluted Earnings Per Share	--	--	--
Dividends Per Share	Cash Dividends	1.2500	0.9500	--
	Accumulated Undistributed Dividend	--	--	--
Return on Investment	Price/Earnings Ratio	27.13	41.70	--
	Price/Dividend Ratio	30.82	46.08	--
	Cash Dividend Yield	3.24	2.17	--

Dividend Policy and Distribution of Earnings ：

1.Dividend Policy ：

If the company makes a profit at the end of each year (the so-called profit refers to the profit before tax minus the profit before the distribution of employee compensation), it shall allocate 0.1% (inclusive) to 1% (inclusive) for employees Remuneration shall be distributed by the resolution of the board of directors and reported to the shareholders meeting. However, if the company has accumulated losses, before appropriating employee compensation, it shall first reserve the amount of loss to make up, and then allocate the balance according to the preceding paragraph.

When the employee compensation in the preceding paragraph is paid in stocks or cash, the recipients include employees of affiliated companies who meet certain conditions.

The company's EARNINGS distribution or loss allowance may be made after the end of each half of the fiscal year. If there is a EARNINGS in each half of the fiscal year, it should first estimate and retain the taxable contributions, make up for the accumulated losses, estimate the retention of employee compensation, and raise 10% of the statutory EARNINGS reserve; and draw up or convert the special EARNINGS reserve in accordance with the law If there is EARNINGS, the balance plus the accumulated undistributed EARNINGS in the first half of the fiscal year shall be the shareholder’s dividend. The board of directors shall draft a EARNINGS distribution proposal. When cash is used, it shall be resolved by the board of directors. When new shares are issued, it shall be It will be

distributed after the resolution of the shareholders meeting is submitted.

If the company’s annual final accounts have net profit after tax for the current period, it shall first make up for the accumulated losses (including adjustment of the amount of undistributed EARNINGS), and deposit 10% according to the law as the statutory EARNINGS reserve; but the statutory EARNINGS reserve has reached the company’s actual income This is not the case for total capital. And as needed, a special EARNINGS reserve may be allocated or the EARNINGS may be retained at the discretion. If there are EARNINGSes and undistributed EARNINGSes at the beginning of the period (including adjustments to the amount of undistributed EARNINGSes), the board of directors shall draft a EARNINGS distribution proposal. When new shares are issued, it shall be submitted to the shareholders meeting for distribution after a resolution.

The company’s business is mainly in the tire industry, with diversified operations. The tire industry is currently in a mature stage and adopts a residual dividend policy. In the annual EARNINGS, in view of the fact that there will still be equipment maintenance and update, production technology upgrades and plant expansion in the next few years For capital needs such as planning, the remaining EARNINGS will be distributed in cash dividends after retaining the funds required for EARNINGS financing; in principle, the EARNINGS distribution will be between 70% and 100% in stock dividends, and between 0% and 30% in cash dividends. However, the above ratio can still be adjusted according to actual needs. To adjust the above ratio due to actual needs, the company's future investment plans and long-term financial planning should be considered. If the company's future investment plans and long-term financial planning require less than 50% of the current year’s distributable EARNINGS, it can be Increase the cash dividend payout ratio to 50% 。

2.Dividend policy for the next three years ：

Nankang will implement the dividend policy in accordance with the articles of association in the next three years, in order to achieve a balanced dividend policy 。

3.Distribution of Earnings ：

The distribution of Nankang's 2020 Earnings is determined by the board of directors (109.8.11 and 110.3.10) as follows:

of directors (109.8.11 and 110.3.10) as follows:
item Unappropriated Retained Earnings of Previous Years Plus: Net income Plus: Remeasurement of Defined Benefit Obligation Retained Earnings Available for Distribution Item 1. Legal reserve 10% The first half of 2020 The second half of 2020	Thousand dollars
		21,527 844,378 4,566 870,471 44,587 40,307

2. Distribution Item 1H20 Cash Dividends to Share Holders (NT$0 .35 per share) 2H20 Cash Dividends to Share Holders (NT$0. 6 per share) 3. Unappropriated R etained Earnings Total	280,787 481,349 23,441 870,471

Impact to 2021 Business Performance and EPS Resulting from Stock Dividend Distribution: None

Remuneration of employees, directors and supervisors ：

1.The amount or scope of the remuneration of employees, directors and supervisors stated in the articles of association:

2.The calculation basis for the amount of remuneration for employees, directors and supervisors in the current period, the calculation basis for the number of shares of employee remuneration distributed by stocks, and the accounting treatment when the actual distribution amount is different from the estimated amount: recognized as the next year Profit 。
and loss adjustment
3.Remuneration distribution approved by the board of directors ：
A. If there is a difference between the amount of employee compensation and the compensation of directors and supervisors distributed in cash or stocks and the annual estimated amount of recognized expenses, the difference, the reason and the handling situation should be disclosed: Nankang's annual provision of estimated employee cash compensation is new NT$1,276,000, which was approved by the board of directors after deliberation by the remuneration committee, and distributed employee cash remuneration of NT$1,276,000, which is no different from the estimated number.

The amount of employee compensation distributed by stocks and the proportion of the total after-tax net profit and total employee compensation in the individual financial report for the current period: the company did not distribute employee stock compensation in 2020 。

4.The actual distribution of the remuneration of employees, directors and supervisors in the previous year (including the number of shares

distributed, amount and stock price), and the difference between the remuneration of recognized employees, directors and supervisors, and the number of differences, reasons and handling circumstances should be stated ： A total of 1,275,670 yuan has been allotted to employees in cash in October 2020 。

method		Cash			Stock	Stock
item	Amount	Number of differenc es	reason	Amount	Price per stock	Numbe r of differen ces	reason
Employees’ Profit Sharing	1,275,670元	None	None	None	None	None	None

Buyback of Common Stock

1.Buyback of Common Stock


	11th	12th	13th	14th	15th

acquisition	Transferred shares to employees (09.09.2016)	Transferred shares to employees (09.09.2016)	Transferred shares to employees (09.09.2016)	Transferred shares to employees (02.08.2017)	Transferred shares to employees
period	2016/5/18~2016/7/1	2016/8/5~2016/8/19	2016/9/12~2016/10/11	2016/12/13~2017/1/9	2017/1/16~2017/2/13
Price range (NT dollars)	26.35 ~ 28.00	28.65 ~ 31.50	29.45 ~ 30.20	29.20 ~ 30.00	29.30 ~ 31.50
Amount (thousand shares)	Common sotck 7,000	Common sotck 15,000	Common sotck 1,400	Common sotck 3,986	Common sotck 4,300
Price (NT thousand dollars)	191,239	459,264	42,085	118,077	132,563
Shares sold/transferred	--	--	--	--	--
Accumulated number of company shares held	7,000仟股	22,000仟股	23,400仟股	27,386仟股	31,686仟股
Percentage of total company shares held (%)	0.84%	2.64%	2.81%	3.28%	3.80%

2.Buyback of Common Stock(executing)
Issuance of Corporate Bonds:None

Convertible Bond: None

Exchangeable Bond: None
Preferred Shares: None
Issuance of American Depositary Shares
Issuance of Employee Stock Options: None.
Status of Employee Restricted Stock: None
Status of New Share Issuance in Connection with Mergers and Acquisitions: None.
Funding Plans and Implementation

IV.Operational Highlights

1. Business Activities

(1) Business Scope

南港輪胎股份有限公司所經營業務，依照公司章程第二條規定如下：
(1)C804010Tires Manufacturing;
(2)CC01010 Electric Power Supply, Electric Transmission and Power Distribution Machinery Manufacturing;
(3)CC01030 Electric Appliance and Audiovisual Electric Products Manufacturing;
(4)CC01060 Wired Communication Equipment and Apparatus

Manufacturing;

(5)CC01070 Telecommunication Equipment and Apparatus

Manufacturing;

(6)CC01080 Electronic Parts and Components Manufacturing;
(7)CC01990 Electrical Machinery, Supplies Manufacturing;
(8)F114050Wholesale of Tires and Tubes;
(9)F214050Retail Sale of Tires and Tubes;
(10)F301020Supermarkets;
(11)F401010International Trade;
(12)F501060Restaurants;
(13)G202010Parking Garage Business;
(14)G801010Warehousing and Storage;
(15)H701010Residence and Buildings Lease Construction and Development;
(16)H701020Industrial Factory Buildings Lease Construction and Development;

(17)H701040Specialized Field Construction and Development;

(18)H701050Public Works Construction and Investment;

(19)H701060New County and Community Construction and Investment;

(20)I301010Software Design Services;

(21)J701020Amusement Parks;
(22)J901020Hotels and Motels;
(23)JE01010Rental and Leasing Business;
(24)ZZ99999 All business items that are not prohibited or restricted by

law, except those that are subject to special approval.

2.Main products and sales ratio

Sales ratio of 2020

Unit: NT thousand dollas ； %

	Revenue amount	%	Revenue amount	%
item
	(Nankang only)	(Nankang only)	(Consolidated)	(Consolidated)

Automobile tires	6,192,230	99.58	9,664,206	99.68
Motorcycle tires	26,042	0.42	29,697	0.32
Others	44	--	1,216	--
Total	6,218,316	100.00	9,695,119	100.00

3.Main products

（ 1 ） Automobile tires.
（ 2 ） Motorcycle tires (MCR 、 MC/SC) 。
（ 3 ） Truck tires.
（ 4 ） Others
4.New products development
（ 1 ） Development of rain tires for the track.
（ 2 ） Research and development of European label (RRC, Wet) double A- level summer tires.
（ 3 ） Research and development of all-weather tires with European labels Wet A and RRC B.
（ 4 ） Research and development of European-labeled Wet A-level and RRC B-level electric tire products.
（ 5 ） Development of the new generation snow tire AW-1 in Japan.
（ 6 ） Development of the new stud-free snow tire SV-4 in Central and Southern Europe.

Industry Overview

1.Industry status and development

The tires produced by Nankang are mainly car tires for motor vehicles. The output ratio of light truck tires and car tires is more than 99%. Since the Zhangjiagang plant started production in 2003, its turnover has grown rapidly from NT$16 million to NT$3,100 million in 2020, accounting for approximately 32% of consolidated operating income. The Zhangjiagang plant has been in production since 2003, with a daily production capacity of more than 18,000 equipment.

The current production capacity of Xinfeng Plant has increased to more than 20,000, MCR production capacity is 10,000 pieces/year, LTR production capacity is 10,000 pieces/month

2.Relevance between upstream, midstream and downstream industries:

The products produced by the company are raw materials such as tires, rubber, black smoke, and steel wire in the upstream of the industry, and new car factories and dealers in the downstream. The relationship between the upper, middle and lower reaches of the industry is shown in the figure below.

==> picture [444 x 364] intentionally omitted <==

3.The development trend of the productProduct development trend In response to the demand for performance tires in various markets, the development focus is on European all-hot melt tires and North American large-size UHP and 4×4 series; European and American environmental protection awareness, policies and power facilities have made the growth trend of electric vehicles clear, in response to low pollution and low noise. With high torque and other characteristics, the performance of various tires needs to be matched with the characteristics of electric vehicles. For example, the improved fuel efficiency of tires can reduce environmental pollution, lownoise patterns can increase the sense of tranquility in the car, and the tread wear-resistant formula can avoid The rapid wear of the tires caused by the high torque of electric vehicles. This cutting-edge product can expand the difference between our company's products and other brands, improve

competitiveness, and increase product sales profits. 。

4.Product Competition

Well-known brands such as MICHELIN, BRIDGESTONE, CONTINENTAL, etc., have no direct impact due to different market positioning levels. The main competing brands are Zhengxin, Taifeng, and Kenda in China, and KUMHO and HANKOOK in South Korea. In 2020, the U.S. Department of Commerce announced that it would conduct anti-dumping investigations on four Asian countries (Thailand, Vietnam, South Korea, Taiwan). The initial ruling rate is not conducive to Taiwanese companies, forcing manufacturers to accelerate investment plans in Southeast Asia and increase access to other markets to reduce anti-dumping policies. Conversely, the period when Chinese

brands are affected by the US dual anti-dumping policies (anti-dumping and countervailing) is approaching, and sales in the Americas are expected to increase. Although the coronavirus incident has severely hit the automobile manufacturing industry and its related industries, it does not affect the trend of electric vehicles gradually replacing fuel vehicles in various markets. In response to the prospect of rising demand for electric tires, Nankang has carried out new product research and development and production capacity planning as soon as possible to maintain market competitiveness. In the case of rising raw material costs and the impact of exchange rates, the company’s business strategy is adjusted as follows:

(1)Increase the value-added products: Europe focuses on the development of four-season tires and snow tires; the US, Australia, and the Middle East markets focus on 18~26 inch PCR UHP, and expand the light-duty product line for 4×4/SUV vehicles; Asia Increase gross profit with special modified specifications as high niche products; and increase domestic market profit with full-hot

melt and semi-hot melt MC/SC products 。

(2)Adjust the customer-level structure of the region and increase the
number of image stores 。
(3)Strengthen the export market: 94% of the export sales, and 78.9% of the export sales in Europe, America and Japan, and they are all highunit-price products
(4)Reduce production costs: process improvement, reduction of scrap rate, and transfer of some products to mainland production to reduce manufacturing costs.
(5)Strengthen financial risk control: forward foreign exchange trading operations, product liability insurance, and pre-purchase of major raw materials to avoid the risk of increased production costs when material prices rise.
(6)Strengthen internal control management and reduce costs.

Technology and R&D Overview

1.From February 1, 2020 to January 31, 2021, Nankang invested in research and development expenses:
(1)2020 ： 94,446 thousand dollars.
(2)As of February 28, 2021 ： 14,360 thousand dollars.
2.Research and Development Achievements in the Past Years
(1)Wide white side retro tire.
(2)Central and South America 4*4 tires SX-6.
(3)Southeast Asia 4*4 RT tires.
(4)New Nordic nailing snow tire SW-9.
(5)New Nordic stud-free snow tire ICE-2.
(6)Run flat continuous running tire (snow tire).

Long-term and Short-term Development

1.Long-term Development

In the future, Nankang plans to set up sales offices in major markets around the world to expand overseas markets (such as setting up branches to serve the local market). Since 2010, the European branch

has started operations. In the future, in response to increased production capacity, new channels and new product introductions In order to increase performance. In the future, the sales volume in the mainland will be strengthened to increase the company's operating profit.

2.Short-term Development

In response to the continuous increase in the cost of raw materials, the plan is to adjust the product group and the introduction of automated production to maintain costs, maintain the annual gross profit margin, and expand sales in the North American and Middle East markets in 2020 。

2. Market and Sales Overview

(1)Market analysis:Light truck tires LT, car tires PC, snow tires, SUV tires, etc., accounting for approximately 99.9% of revenue.
(1)2020 Main Sales Region ：

		(1)2020 Main Sales Region：	(1)2020 Main Sales Region：	(1)2020 Main Sales Region：	(1)2020 Main Sales Region：
						Unit: NTthousand dollars
		Operatingincome -Nankangonly				Operatingincome -Nankangconsolidated
Region		2019		2020		2019		2020
		Amount	%	Amount	%	Amount	%	Amount	%
Domestic sales		394,267	5.78	406,563	6.54	467,950	4.21	500,785	5.17
Overseas sales		6,426,945	94.22	5,811,753	93.46	10,643,630	95.79	9,194,334	94.83
Total		6,821,212	100.00	6,218,316	100.00	11,111,580	100.00	9,695,119	100.00
The amount of export distribution area and its ratio to total sales	America	4,100,739	60.12	3,796,893	61.06	4,750,033	42.75	4,287,525	44.22
	Europe	449,175	6.58	464,485	7.47	2,885,479	25.97	2,475,061	25.53
	China	4,764	0.07	5,248	0.08	423,400	3.81	397,673	4.10
	Other Asia	865,988	12.70	803,665	12.93	1,130,639	10.18	1,005,636	10.37
	Others	1,006,279	14.75	741,462	11.92	1,454,079	13.08	1,028,439	10.61

1.Market share and future supply and demand conditions and growth of the market
(1) market share

According to the latest global tire sales rankings announced by the American Tire Business magazine for 2020, Nankang Tire ranks 55th and is the world’s top 60 manufacturers 。

(2) Possible future supply and growth

After the Taiwan plant's production capacity is increased to 20,000 tires per day, it will provide sufficient supply of car and light truck tires in the main markets in Europe, the United States and Japan. The development and mass production of electric tires will also be included in the production focus of the two plants in 2020. ; Compared with ordinary UHPT tires, Nankang Tire's product quality advantages will bring more business opportunities to global distributors and agents 。

(3) Advantages and disadvantages of competitive niche and development prospects and countermeasures:

A. Advantages:
a. Advantages of research and development capabilities and experience:

Since its establishment in 1959, Nankang Tire has accumulated rich experience in professional tire design and new product research and development. From product design and manufacturing to quality and testing of finished products, it has an important position in the industry. At the same time, it was awarded in 2001. Awarded as one of the top 100 domestic brands. In April 2017, he was awarded the "Taiwan Excellence Award". In March 2016, AS-2+ was awarded the "Innovative Product Silver Award" at the Taipei International Auto Parts Exhibition hosted by the Republic of China Foreign Trade Association.

b. Good product quality: Nankang Tire has been studying the improvement of tire products for a long time, and has cooperated with famous international companies in technology, and has obtained ISO9001, ISO14001 and other quality management system certifications. Therefore, the quality of the manufactured products is highly praised. The 2015 new product ECO-2+ also obtained the TÜV SÜD Mark tire certification from the German certification body.
c. Good relationship with raw material suppliers, the supply of raw materials is reliable and the quality is stable.
B. Advantages and disadvantages of development prospects and countermeasures:
a. Advantages:
- (a)The tire industry is a capital-intensive and technologyintensive industry. Due to the high level of capital and technology, it is difficult for new manufacturers to join. At the same time, China adopts a tightening policy for new licenses and imposes restrictions on the development of new production capacity.
- (b)Nankang Tire has obtained ISO 9001, ISO 14001 quality management system certification and European E-MARK certification, which contributes to the improvement of domestic and foreign market competitiveness.
- (c)Since tire products are consumable products, they are relatively less affected by the economy than other industries.
- (d)Nankang Tire has strong R&D technology capabilities, and often leads the development of new products, such as the development of snow tires and high-performance car tires, etc.
- (e)Nankang Tire has a long history. Since its establishment in 1959, Nankang Tire’s image and product quality have been highly recognized by customers.
- (f)Increase revenue and reduce expenditure. Actively develop new customer sources to create revenue, while diversifying risks, so that revenue is not easily affected by

a single region or customer; in addition, it strengthens cost and expense control to improve profitability.

b. disadvantages:
(a)The limited recovery of the European economy has led to a reduction in people’s spending power, thus adversely affecting the sales of Nankang Tire.
(b)The price of rubber raw materials gradually rises, which in turn affects the overall profitability.
(c)Due to the anti-dumping and anti-subsidy measures taken by the United States against mainland China, tire factories in mainland China have overcapacity and caused oversupply in the tire market. It is expected that competition in the low- and medium-priced tire market will intensify, which will adversely affect tire prices. 。
c. Responsibility:
(a)Actively research and develop new products, such as lowprofile high-performance car tires and new pattern energysaving tires dedicated to four-wheel transmission to meet market demand 。
(b)Actively seek the substitution of raw materials to reduce costs and diversify risks, and avoid the risk of being restricted by a single material 。
(c)Actively develop new customers and expand export markets to increase turnover 。
(d)Adjust the product structure and increase the added value of the product to enhance the profitability of Nankang Tire
(e)Improve the on-site working environment, update machinery and equipment to improve work quality, production efficiency and attract talent 。

(2)Main products and production process

1.The main products of Nankang Tire are automobile tires
2.Tire manufacturing process

==> picture [451 x 640] intentionally omitted <==

Supply status of main raw materials:


Item	supplier

Natural Rubber	HEVEA GLOBAL PTE LTD
	REGIONAL RUBBER TRADING
	YONGAN (SINGAPORE) INTERNATIONAL TRADE PTE.LTD
Synthetic Rubber	TSRC Corporation
	BIG VICTORY ENTERPRISE INC
	MOST GLAD LIMITED
Carbon Black	Linyuan Advanced Materials Technology Co., Ltd.
	Jiangxi Black Cat Carbon Black Inc., Ltd.
	DRAGONSUN GLOBE CO., LTD.
Fabric	Jiangsu Taiji Industry New Materials Co., Ltd.
	FORMOSA TAFFETA CO., LTD.
Bead Wire	JIANGSU XINGDA STEEL
	KISWIRE CORD YANGTZE
Chemicals	SUN BEAM TECH. INDUSTRIAL CO., LTD.
	SHANDONG YANGGU HUATAI CHEMICAL
	JIANGSU JI AOXIANG IMPORT AND EXPORT CO., LTD.

Major Suppliers and Clients

1. Major Suppliers in the Last Two Calendar Years

Unit: NT thousand dollars

2019

2019	2019	2019	2019	2019
Ranking	Name	Amount	Percent	Relation with Issuer
1	TSRC Corporation	503,415	8.45	None
	Others	5,454,819	91.55
	Total	5,958,234	100.00

		2020

Ranking	Name	Amount	Percent	Relation with Issuer
1	TSRC Corporation	485,955	10.45	None
	Others	4,162,917	89.55
	Total	4,648,872	100.00

2. Major Clients in the Last Two Calendar Years

Unit: NT thousand dollars

		2019
Ranking	Name	Amount	Percent	Relation with Issuer
1	Clients A	2,500,525	22.50	None
2	Clients B	1,740,502	15.66	None
	Others	6,870,553	61.84
	Total	11,111,580	100.00
		2020
Ranking	Name	Amount	Percent	Relation with Issuer
1	Clients A	2,196,120	22.65	None
2	Clients B	1,697,320	17.51	None
	Others	5,801,679	59.84
	Total	9,695,119	100.00

Production in the Last Two Years

1.Nankang Only

unit ： thousand piece ， NT thousand dollars

Year
		2019			2020
Output

Major Products	Capacity	Quantity	Amount	Capacity	Quantity	Amount
Automobile tires	8,165	5,396	5,265,661	7,894	5,217	4,654,069
Motorcycle tires	60	5	4,495	72	6	5,681
Total	8,222	5,401	5,270,156	7,951	5,223	4,659,750

2.Consolidated

unit ： thousand piece ， NT thousand dollars

Year
		2019			2020
Output

Major Products	Capacity	Quantity	Amount	Capacity	Quantity	Amount

Automobile tires	14,005	9,590	8,827,733	13,745	9,412	7,466,075
Motorcycle tires	60	5	4,495	72	6	5,681
Total	14,065	9,595	8,832,228	13,806	9,418	7,471,756

Shipments and Sales in the Last Two Years 1.Nankang Only:

unit ： thousand piece ， NT thousand dollars

					2020	2020	2020	2020
Year	2019

Output	Local		Export		Local		Export
Major Products	Quantity	Amount	Quantity	Amount	Quantity	Amount	Quantity	Amount
Automobile tires	318	392,225	5,340	6,420,051	324	388,761	5,073	5,803,469
Motorcycle tires	1	2,042	4	6,790	49	17,802	5	8,240
Others	-	-	1	104	-	-	2	44
Total	319	394,267	5,345	6,426,945	373	406,563	5,080	5,811,753

2.Consolidated:

unit ： thousand piece ， NT thousand dollars


Year	2019					2020

Output	Local		Export			Local		Export
							Quantit
Major Products	Quantity	Amount	Quantity	Amount	Quantity	Amount		Amount
							y

Automobile tires	320	463,267	9,284	10,636,736	338	478,156	8,356	9,186,050
Motorcycle tires	3	4,125	4	6,790	50	21,457	5	8,240
Others	5	558	1	104	5	1,172	2	44
Total	328	467,950	9,289	10,643,630	393	500,785	8,363	9,194,334

3. Human Resources

February 25, 2021

年度
		2019	2020	As of February 25, 2021

Number of Employees	Staff	299	320	323
	Operator	526	513	515
	Foreign workers	566	546	502
	Total	1391	1379	1340
Average Age		40.6	41.6	41.5
Average Years of	Service	10.4	10.8	10.7
Education	Ph.D.	0.12%	0.24%	0.24%
	Masters	5.22%	5.52%	5.73%
	Bachelor’s Degree	32.52%	33.25%	33.69%
	Senior High School	45.63%	44.06%	43.61%
	Below Senior High	16.51%	16.93%	16.73%

Environmental Protection Expenditure
(1)Total Losses and Penalties:
- 1.On April 24, 2020, in violation of Article 31, Paragraph 1, Paragraph 1, of the Waste Disposal Act, the penalty was NT$6,000.
- On May 5, 2020, in violation of Article 31, Paragraph 1, Paragraph 1, of the Waste Disposal Act, the penalty was NT$6,000.

Countermeasures:

1.The aforementioned two cases on April 26, 2018 and June 25, 2019 were caused by incorrect values in the declared data (nonenvironmental pollution).
2.The relevant content plan and current situation have been reported to the competent authority for reference and applied for change adjustment.

Environmental protection expenditures in 2020:

1.Expenditure for disposal of industrial waste is approximately NT$11,913,000.
2.Air pollution prevention equipment expenditure is

approximately NT$25,608,000.

Labor Relations

(1)Employee Benefit Programs

⚫ Plant facilities and services ：

There are staff restaurants, staff welfare agencies, vending machines and other facilities in the factory area, and

transportation vehicles are arranged for employees to commute.

⚫ Health management:
Health management regularly handles various health promotion activities, including health lectures, factory doctors to the factory for consultation (face-to-face), blood donation, weight loss, smoking cessation, blood donation, etc., to enhance employees’ self-health awareness; employees’ physical health checks are provided annually, and in accordance with health Check the results, give appropriate health promotion suggestions, and track the physical and mental conditions of employees through abnormal ethnic group tracking; for employees who are human-induced hazards and maternal health protection, after interviews with doctors, hazard prevention or improvement measures are taken at different levels.
⚫ Education and welfare policy for employees' children Employees can apply for childcare and childcare subsidies every year before their children are 7 years old, so that employees can reduce their burdens and reduce work pressure; provide awards, bursaries and related tuition and miscellaneous subsidies for employees’ children.
⚫ Various employee welfare programs:

In addition to general labor and health insurance, the welfare measures provided by the Employee Welfare Committee include: annual payment, travel subsidies, employee children's stipends, birthday parties, marriages, senior employee incentives, hospitalization allowances, and funeral subsidies. (Nankang Tire was approved by the competent authority to establish the Employee Welfare Committee on August 3, 1982. The source of the benefits: (1) 1% capital allocation at the time of establishment, (2) 0.5% monthly salary allocation, ( 3) Appropriate 0.15% of monthly net business, (4) Appropriate

40% of selling off, and (5) other interest income.

⚫ Staff training:

In order to enhance employees' work intelligence, improve their quality and work efficiency, Nankang Tire has specially formulated training methods for practitioners, and provided necessary training for employees at all levels of Nankang Tire. In September of each year, the education and training plan, budget, implementation effectiveness, student learning evaluation report and annual education and training review report are presented at the meeting of the management review committee of the company.

Nankang Tire’s education and training system is divided into four categories: (1) new recruits training (2) on-the-job training for employees (3) cadre training at all levels (4) foreign technical training and out-of-company lectures, etc., and various education and training are used to strengthen employees Skills and enhance the company's competitiveness, and file training data of employees.

⚫ Employee rewards:

In order to encourage employees to actively pursue continuous growth and enhance the company's competitiveness, Nankang Tire provides various reward methods including: monthly excellent employee selection, quarterly model labor selection, 6S appraisal awards for each unit, seniority service rewards and retirement thanks.

Retirement system and implementation status:

Nankang Tire has established a "Labor Retirement Reserve Supervision Committee" in accordance with the law. The retirement of employees is handled in accordance with the relevant retirement regulations and Nankang Tire's retirement measures. Nankang Tire has a retirement policy for officially hired employees. According to the regulations, each employee will receive two bases for each full year of service for the first 15 years, and one base for each full year of service from the sixteenth year onwards. , Can receive up to 45 bases. The payment of employee retirement pension is calculated based on the length of

service and the salary of the six months before retirement. Nankang Tire, in accordance with the provisions of the labor retirement reserve allocation and management regulations, allocates a monthly retirement reserve of 15% of the total salary, and deposits it in the Bank of Taiwan in the name of the Labor Retirement Reserve Supervision Committee. If you choose the new labor retirement system, then Withholding 6% of monthly insured salary to the individual labor account of the Bureau of Labor Insurance.

Agreements between labor and management and various employee rights protection measures ：

Since its establishment in 1959, Nankang Tire has maintained a harmonious labor-management relationship, and under the principle of labor-management integration, it has held labormanagement meetings on time every three months, and regularly concluded group agreements with the company’s trade unions. Therefore, relevant proposals can Successfully resolved under the conditions of mutual understanding and mutual benefit between labor and management.

In the most recent year and up to the publication date of the prospectus, the losses suffered due to labor disputes, and the estimated amount and corresponding measures that may occur at present and in the future are disclosed:

Nankang Tire has always upheld the spirit of labor-management harmony and has not suffered any losses due to labor disputes. It is estimated that in the future, Nankang Tire will continue to actively promote labor-management harmony policies and strengthen communication between labor and management and improve welfare measures. There should be no loss due to labor disputes. Code of employee conduct or ethics:

Nankang Tire’s work rules set various codes of conduct or ethics for employees, which are listed as one of the important items for assessment at the end of the year. In order to implement the implementation of various codes, a complete reward and 。 punishment system is established

6. Environment and Industrial Safety

Nankang Tire has always spared no effort in the importance and implementation of environmental protection, industrial safety and employee health. Passed the continuous implementation of ISO14001, and completed the certification of

OHSAS18001&CNS15506 in March 2013, so as to enhance 。 employees' awareness of environmental safety

Environmental Declaration:

In order to achieve the sustainable development mission of environmental protection and giving back to the public, Nankang Tire adheres to the spirit of "Environmental protection for all employees, following policies and regulations, saving waste and reducing pollution, and being a home company" and the requirements of ISO14001 international environmental management standards:

(1)Committed to employee environmental education, promote environmental protection concepts, and enhance environmental awareness.

(2)Meet the requirements of government environmental protection regulations and related organizations.

(3)Continue to reduce the amount of production auxiliary materials and raw materials used.

(4) Committed to dust pollution prevention and control and waste reduction to minimize the company's environmental impact. (5)Conserve natural resources and carry out semi-finished waste classification and recycling.

(6)Make the environmental policy public and communicate it to the organization staff.

Safety and health policy ：

Nankang Tire carefully manages and controls high-risk operations such as falling, electric shock, being trapped, and fire, so as to reduce the impact of occupational safety and health, continuously improve safety and health performance, and ensure consultation with employees and their representatives. Provide them with time and resources to participate in all processes of the

safety and health management system, and through the safety and health committee to make recommendations on the safety and health policies formulated by the employer, and to review, coordinate and suggest safety and health related matters.

3. Environmental Policy:

Nankang Tire is committed to the balance of economic, environmental and social aspects. It pursues the chief operating officer while also taking into account environmental protection. In the face of global climate change, water resources reduction and various environmental pollution issues, it comprehensively inspects raw materials, manufacturing, services, and Recycling and other activities at various stages, taking into account the impact on society and the environment, setting various strategies and goals, creating green competitiveness, and updating equipment to reduce carbon emissions from Nankang tires, hoping to achieve zero carbon emissions in the future.

➢ Air pollution:

The air pollution sources of Nankang Tire are particulate pollutants (PM), sulfur oxides (SOx), nitrogen oxides (NOX) and volatile organic gases (VOCs) produced in the refining, material quality, vulcanization process and boiler steam generation process. ), which meets the emission standards of fixed (air) pollution source operating permits every year.

The generation of peculiar smell of smoke has always been a topic of concern to neighboring residents. In terms of air pollution management policies, Nankang Tire has adjusted the waste gas treatment equipment in the rubber mixing process to ensure compliance with air pollution emission standards in addition to dust collectors, scrubbers and the use of low-odor aromatics by improving the self-refining process of raw materials. Lift the exhaust pipes of air pollution control equipment to reduce the odor and continue to reduce environmental pollution and achieve the expectations of stakeholders.

Due to the increasingly stringent environmental pollution emission standards and the consideration of the sustainability of

the company, the company's Xinfeng Plant expects to plan a second natural gas boiler to replace the oil-fired boiler in the future (the first natural gas boiler has been officially put into production in mid-2018 ), the factory currently uses three activated carbon equipment to adsorb general VoCs. Due to the increase in process capacity, the cost of activated carbon replacement will increase. In 2019, the factory tested the activated carbon adsorption efficiency at the Hsinchu County Environmental Protection Bureau to be insufficient (less than 50 %) and was fined. Therefore, from the beginning of 2020, alternative treatment equipment will be regulated (reducing treatment costs and improving treatment efficiency), in order to reduce emissions and comply with environmental protection regulations and emission standards.

Since 2015, Nankang tires have been replaced for the pile height. In order to improve the public's understanding of the traditional factory area, the diesel stacker has been replaced with an electric stacker, which is higher than the diesel stacker which emits a lot of exhaust gas and noisy. In 2019, Nankang Tire has updated nearly 60% of the stackers to be more environmentally friendly and electric, hoping to provide a comfortable environment for the colleagues in the factory and the residents in the surrounding neighbourhoods..

➢ Water resources management:

The discharge water of Nankang Tire Xinfeng Plant includes two major parts: process wastewater and domestic sewage. The wastewater is discharged after equipment treatment and the government issues a water pollution prevention and control measures license, so the water quality meets the discharge standard) and is carried out in accordance with the Water Pollution Prevention and Control Law. In order to ensure that the sewage treatment process is worry-free, the factory has specially installed the front and back end monitoring systems of the treatment equipment and set up communication software to facilitate the monitoring of abnormal reports.

In the ISO14001 environmental management system, it will be included in the supervision and control items of laws and regulations. Qualified environmental inspection companies are regularly requested to conduct the water quality inspection of the discharged sewage to ensure that the discharged sewage meets the domestic discharge water standards, and the relevant test paper reports are filed for preparation. The competent authority conducts the investigation, and the company's total discharge of water in 2019 is 160,360 cubic meters (the data can be found in the Internet Declaration and Inquiry System of the Environmental Protection Department of the Executive Yuan and the sewage sewer system. Archive), the discharge destination is Xinfengxi, in addition, from 2018 to 2019, the recycling and reuse of wastewater in the area is about 15%.

➢ Waste management ：

The waste of Nankang tires includes general household garbage, waste rubber, waste dust collection, waste sludge, waste oil, waste oil mixture, etc. According to the process waste management strategy, the emphasis is on legal removal and disposal and waste reduction and reuse. All wastes must be determined by laws and regulations. The government-approved material removal and treatment company shall be entrusted to carry out the waste removal and treatment. For the wastes that can be recycled and reused, they shall be classified and commissioned according to their categories, and relevant records shall be archived. Prepare for inspection by the competent authority.

The waste in the factory is implemented in accordance with the "Industrial Waste Removal Plan" approved by the Hsinchu County Environmental Protection Bureau. The waste is handled by a qualified environmental cleaning and transportation company certified by the competent authority. Nankang Tire regularly tracks the route of the removal vehicle to grasp the waste Whether the final flow is legal or not, in addition, Nankang Tire does not have any imported or exported harmful substances.

Recyclable waste includes waste rubber, metal waste, waste

plastic, waste pallets and waste paper cartons, etc., and are also collected separately and handed over to legal recycling companies for recycling to enhance the life of resource recycling and reuse cycle. It is announced that waste products and containers that should be recycled and reused are handed over to Tzu Chi for sorting, and a sorting and recycling system is properly established 。 to strengthen the concept of recycling

The company's environmental policy is as follows ：

Follow the regulations

⚫ Comply with the government's environmental protection laws and customer requirements for environmental protection, and respond to environmental sustainability movements such as global energy conservation and carbon reduction.

Full participation

⚫ Disseminate environmental protection information to colleagues, customers, third parties and other relevant stakeholders through advocacy and communication, so that they can recognize personal responsibilities.
⚫ Disclosure of environmental related information, enhance the environmental sustainability culture of the factory, and implement planning improvements based on stakeholder opinions.

Committed to prevention

⚫ Strengthen chemical storage and use management and use prevention equipment to reduce the impact of wastewater, dust, chemicals, and noise on the environment, properly reduce and classify waste, and enhance its reuse rate.

Continuous improvement

⚫ Optimize process equipment and reduce energy consumption and greenhouse gas emissions. Strengthen the inspection system through continuous improvement of Plan-Do-Check-Action to achieve the goal of sustainable operation.
Greenhouse gas emissions, water consumption and total waste weight in 2020
(1) Greenhouse gas emissions ：

Nankang Tire Xinfeng Plant’s greenhouse gas emissions in 2019 and 2020 have been certified by the British Standards Institute (BSI) in accordance with the verification criteria specified in ISO 14064-1/CNS 14064-1. The total greenhouse gas emissions in 2019 will be 67,307.826 tons, and the emissions in 2020 will be 55,849.890 tons, an annual reduction of about 17.02%

(2) Water consumption:

Nankang Tire’s Xinfeng Plant’s water consumption in 108 years was 115,567 kWh, and the water consumption in 109 was 115,230 kWh, an annual reduction of about 0.29%.

(3) Total weight of waste ：

The total waste weight of Nangang Tire Xinfeng Plant in 2019 years was 1,682.18 tons, and it was 2,944.94 degrees in 2020 years, an annual increase of about 75.07%.

Corporate Social Responsibility

The concept of Nankang Tire’s social responsibility is based on the idea that business operations must comply with sustainable development and abide by corporate ethics in order to gain support from the society, create more profits, and give back to the society at the same time. Therefore, it is not only necessary to start with the social responsibility of "self-interest", but also from the responsibility of "self-interest" to the ethical level of "altruism" in order to create a modern enterprise that combines name and reality.

The management and practice of environmental protection have been highly affirmed. As for the importance of industrial safety, it spares no effort. Regular fire drills, health inspections for all employees, factory maintenance settings, and various full-time environmental protection and industrial safety certification personnel training and obtaining, at the same time In order to achieve the purpose of preventing accidents, improving the safety and health of employees, protecting company property, preventing pollution, and promoting good-neighborliness, emergency response drills are held regularly to strengthen the company's

response capabilities.

Nankang Tire fulfills its social responsibilities. In addition to paying taxes on annual surpluses, it also actively participates in various activities in the region to enhance a better living environment for community residents.

In accordance with this criterion, Nankang Tyre implements public welfare activities as follows:

Regularly participate in and sponsor public welfare activities organized by residents in nearby villages.
Nankang Tire regularly participates in beach cleaning and street sweeping activities organized by the Hsinchu County Environmental Protection Bureau every year. Increase participation in the cleaning and maintenance activities of the environment of Hongmaogang Scenic Area in Xinfeng Township every week 。
In the winter of 2020, Nangang Tire will organize winter warming activities for low-income households in the villages near the factory, including grain, winter quilts and other materials, benefiting about 120 households.
Sponsor local charity elimination and community activities.
Continue to cooperate with local universities and colleges in Hsinchu to set up construction and education cooperation, so that students can acquire skills and integrate them in advance, so that they can enter the workplace smoothly in the future. In 2020, 215 students have participated in this project. The industry-university cooperation includes the tire manufacturing process. Learning, raw material management, industrial engineering management, material and formula research and development, tire pattern design... and other related industry knowledge.
Important Contracts

Agreement	Counterparty	Period	Major Contents	Restrictions
Quality Assurance Contract	CSRC	2001.2.01~2020.2.1	Ensure the quality of supply	None

Quality Assurance Contract TSRC Corporation 2001.2.01~2020.2.1 Ensure the quality of supply None

V. Financial Information

一、 Five-Year Financial Summary

一 ( ) Condensed Balance Sheet

1. Consolidated Condensed Balance Sheet¬¬

Unit: NT$ thousands


			Financial Summary for The Last Five Years				As of
Year
							March 31,
item
		2020	2019	2018	2017	2016	2021


Current assets		22,265,066	17,674,856	14,054,542	14,240,216	13,156,578
Property, Plant and Equipment		8,278,421	8,283,229	8,351,677	8,521,833	8,514,077	“
Intangible assets		2,348	2,327	2,209	507	646	“
Other assets		1,479,305	1,681,879	1,007,586	985,780	1,093,949	“
Total assets		32,025,140	27,642,291	23,416,014	23,748,336	22,765,250	“
Current liabilities	Before distribution	15,119,094	15,514,211	8,903,486	10,832,324	9,431,051	“
	After distribution	15,600,443	16,115,898	9,064,018	11,399,400	10,348,379	“
Non-current liabilities		6,118,739	1,419,189	4,138,253	2,020,615	1,852,079	“
Total liabilities	Before distribution	21,237,833	16,933,400	13,041,739	12,852,939	11,283,130	“
	After distribution	21,719,182	17,535,087	13,202,271	13,420,015	12,200,458	“
Equity attributable to shareholders of theparent		10,787,307	10,708,891	10,374,275	10,895,397	11,482,120	“
Capital stock		8,339,349	8,339,349	8,339,349	8,339,349	8,339,349	“
Capital surplus		18,970	18,970	18,970	18,970	18,970	“
Retained earnings	Before distribution	3,196,579	3,230,109	2,654,029	3,046,147	3,340,507	“
	After distribution	2,715,230	2,628,422	2,493,497	2,479,071	2,423,179	“
Other equity interest		175,638	63,692	305,156	434,160	541,393	“
Treasury stock		(943,229)	(943,229)	(943,229)	(943,229)	(758,099)	“
Non-controlling interest		--	--	--	--	--	“
Total equity	Before distribution	10,787,307	10,708,891	10,374,275	10,895,397	11,482,120	“
	After distribution	10,305,958	10,107,204	10,213,743	10,328,321	10,564,792	“

2. Condensed Statement of Income

Unit: NT$ thousands


			Financial Summary for The Last Five Years				As of
Year
							March 31,
item
		2020	2019	2018	2017	2016
							2021



Current assets		4,419,833	2,622,500	3,981,548	4,144,450	3,564,356
Property, Plant and Equipment		5,963,161	6,008,333	5,945,002	5,919,391	5,606,740	“
Intangible assets		--	--	--	--	--	“
Other assets		10,929,397	11,273,435	10,922,646	10,702,320	10,656,404	“
Total assets		21,312,391	19,904,268	20,849,196	20,766,161	19,827,500	“
Current liabilities	Before distribution	9,433,007	7,874,439	9,055,814	8,337,511	6,980,761	“
	After distribution	9,914,356	8,476,126	9,216,346	8,904,587	7,898,089	“
Non-current liabilities		1,092,077	1,320,938	1,419,107	1,533,253	1,364,619	“
Total liabilities	Before distribution	10,525,084	9,195,377	10,474,921	9,870,764	8,345,380	“
	After distribution	11,006,433	9,797,064	10,635,453	10,437,840	9,262,708	“
Equity attributable to shareholders of theparent		10,787,307	10,708,891	10,374,275	10,895,397	11,482,120	“
Capital stock		8,339,349	8,339,349	8,339,349	8,339,349	8,339,349	“
Capital surplus		18,970	18,970	18,970	18,970	18,970	“
Retained earnings	Before distribution	3,196,579	3,230,109	2,654,029	3,046,147	3,340,507	“
	After distribution	2,715,230	2,628,422	2,493,497	2,479,071	2,423,179	“
Other equity interest		175,638	63,692	305,156	434,160	541,393	“
Treasury stock		(943,229)	(943,229)	(943,229)	(943,229)	(758,099)	“
Non-controlling interest		--	--	--	--	--	“
Total equity	Before distribution	10,787,307	10,708,891	10,374,275	10,895,397	11,482,120	“
	After distribution	10,305,958	10,107,204	10,213,743	10,328,321	10,564,792	“

( 二 ) Condensed Statement of Comprehensive Income

1. Consolidated Condensed Statement of Comprehensive Income-consolidated

Unit: NT$ thousands


		Financial Summary for The Last Five Years				As of
Year
						March 31,
Item
						2021
	2020	2019	2018	2017	2016


Operating revenue	9,695,119	11,111,580	10,445,261	11,326,015	10,318,606
Gross profit	2,330,381	2,057,885	1,633,005	2,117,604	2,309,461	“
Income from operations	1,029,090	714,705	425,577	917,353	1,061,974	“
Non-operating income	91,995	620,498	(85,154)	(91,584)	489,762	“
Non-operating expenses	1,121,085	1,335,203	340,423	825,769	1,551,736	“
Income before tax	844,378	1,135,684	183,406	633,267	1,025,658	“
Net income (Loss)	--	--	--	--	--	“
Other comprehensive income (income after tax)	844,378	1,135,684	183,406	633,267	1,025,658	“
Total comprehensive income	116,512	(239,411)	(137,453)	(117,532)	(535,314)	“
Net income attributable to shareholders of the parent	960,890	896,273	45,953	515,735	490,344	“
Net income attributable to non-controlling interest	844,378	1,135,684	183,406	633,267	1,025,658	“
Comprehensive income attributable to Shareholders of theparent	--	--	--	--	--	“
Comprehensive income attributable to non- controllinginterest	960,890	896,273	45,953	515,735	490,344	“
Earnings per share	--	--	--	--	--	“
Operating revenue	1.05	1.42	0.23	0.79	1.25	“

2. Consolidated Condensed Statement of Comprehensive Income-Parents Only

Unit: NT$ thousands

						As of
		Financial Summary for The Last Five Years				March 31,
Year
						2021
Item

	2020	2019	2018	2017	2016


Operatingrevenue	6,218,316	6,821,212	5,772,242	6,658,295	5,200,368
Grossprofit	1,419,488	1,308,890	843,323	1,236,962	1,153,414	“
Income from operations	604,142	447,683	82,474	459,519	330,744	“
Non-operatingincome	457,759	826,710	168,261	307,859	1,021,188	“
Non-operatingexpenses	1,061,901	1,274,393	250,735	767,378	1,351,932	“
Income before tax	844,378	1,135,684	183,406	633,267	1,025,658	“
Net income(Loss)	--	--	--	--	--	“
Other comprehensive income (income after tax)	844,378	1,135,684	183,406	633,267	1,025,658	“
Total comprehensive income	116,512	(239,411)	(137,453)	(117,532)	(535,314)	“
Net income attributable to shareholders of the parent	960,890	896,273	45,953	515,735	490,344	“
Net income attributable to non-controlling interest	--	--	--	--	--	“
Comprehensive income attributable to Shareholders of the parent	--	--	--	--	--	“
Comprehensive income attributable to non- controllinginterest	--	--	--	--	--	“
Earningsper share	--	--	--	--	--	“
Operatingrevenue	1.05	1.42	0.23	0.79	1.25	“

一 ( )Auditors’ Opinions from 2017 to 2021

Year	CPA	CPA	Audit Opinion
2020	Chou, Ying-Lai	Tseng, Kuo-Fu	An Unmodified Opinion
2019	Chou, Ying-Lai	Tseng, Kuo-Fu	An Unmodified Opinion
2018	Chou, Ying-Lai	Tseng, Kuo-Fu	An Unmodified Opinion
2017	Chou, Ying-Lai	Tseng, Kuo-Fu	An Unmodified Opinion
2016	Chou, Ying-Lai	Tseng, Kuo-Fu	An Unmodified Opinion

二、 Five-Year Financial Analysis

、 1 Consolidated Financial Analysis

			Financial Analysis for the	Financial Analysis for the	Financial Analysis for the	Last Five Years	Last Five Years
Year								As of	Percentage
								March 31,	in last two	Remarks
Item			2020	2019	2018	2017	2016
								2021	years

Financ ial structu re (%)	Debt Ratio		66.32	61.26	55.70	54.12	49.56		8.26
	Ratio of long-term capital to property, plant and equipment		204.22	146.42	173.77	151.56	156.61	“	39.48	(1)
Solven cy (%)	Current ratio		147.26	113.93	157.85	131.46	139.50	“	29.25	(2)
	Quick ratio		79.66	57.66	61.43	48.69	53.18	“	38.15	(2)
	Interest earned ratio (times)		12.30	10.95	3.77	8.36	18.40	“	12.33
Operat ing perfor mance	Accounts receivable turnover(times)		4.18	4.82	4.88	5.47	5.22	“	(13.28)
	Average collection period		87	76	75	67	70	“	14.47
	Inventory turnover (times)		0.80	1.07	1.02	1.09	1.02	“	(25.23)	(3)
	Accounts payable turnover(times)		16.21	24.29	15.92	16.27	19.14	“	(33.26)	(4)
	Average days in sales		456	341	358	335	358	“	33.72	(3)
	Property, plant and equipment turnover (times)		1.17	1.34	1.24	1.33	1.21	“	(12.69)
	Total assets turnover (times)		0.32	0.44	0.44	0.49	0.45	“	(27.27)	(4)
Profita bility Cash flow	Return on total assets (%)		3.10	4.87	1.20	3.12	4.78	“	(36.34)	(5)
	Return on stockholders' equity (%)		7.86	10.77	1.72	5.66	8.77	“	(27.02)	(5)
	Pre-tax income to paid-in capital (%)	Profit ratio (%)	12.34	8.57	5.10	11.00	12.73	“	43.99	(6)
		Earnings per share (NT$)	13.44	16.01	4.08	9.90	18.61	“	(16.05)
	Profit ratio(%)		8.71	10.22	1.76	5.59	9.94	“	(14.77)
	Earningsper share(NT$)		1.05	1.42	0.23	0.79	1.25	“	(26.06)	(5)
	Cash flow ratio (%)		9.11	27.48	12.12	6.94	12.99	“	(66.85)	(7)
	Cash flow adequacy ratio (%)		82.85	71.21	48.75	75.75	98.90	“	16.35

	Cash reinvestment ratio (%)	1.59	14.37	1.82	(0.64)	4.13	“	(88.94)	(7)
Financ ial structu re (%)	Operating leverage	2.20	2.86	4.07	2.45	2.32	“	(23.08)	(8)
	Financial leverage	1.11	1.23	1.41	1.14	1.09	“	(9.76)

Remarks:

(1) The ratio of long-term funds to real property, plant and equipment: The non-current liability factor of 2020, Nanrong Development and Construction Company increased its long-term borrowings by 4,928,435 thousand yuan compared with that in 2019, resulting in an increase in the ratio of long-term funds to real property, plant and equipment;

(2) Liquidity and quick ratio: financial assets measured at fair value through profit and loss in 2020 increased by RMB 2,248,067 thousand compared with the previous year, which affected the increase of 25.97% in current assets in 2020 compared with the change in 2019, which is conducive to the change in current and quick ratios. 29.25%, 38.15%;

(3) Inventory turnover rate and average sales days: Mainly due to the fact that the subsidiary Nanrong's development and construction project in 2020 has entered the substantive development stage, and the increase in construction in progress (the company's inventory accounted for 88% of the combined), resulting in a decrease in the combined inventory turnover rate And increase the average sales days;

(4) Payable turnover rate and total asset turnover rate: The consolidated revenue of 2020 years fell by 12.75% compared with that of 2019 years, which relatively affected the cost of goods sold, resulting in lower payable turnover rate and total asset turnover rate;

(5) Profitability ratio: The profitability of the year 2020 decreased by RMB 291,306 thousand compared with that of the year 2008, which is not conducive to the return on assets, equity, and earnings per share; (6) Operating profit ratio: Although the consolidated revenue in 2020 years declined by 12.75%, due to the proper control of material costs and management and sales expenses, the operating profit ratio increased by 314,385 thousand yuan compared with that in 2019 years, resulting in a favorable change in operating profit ratio of 43.99%;

(7) Cash flow and cash reinvestment rate: The net cash inflow from operating activities in 2020 decreased by 2,885,828 thousand yuan compared with that in 2019 (mainly due to the increase in cash outflows of 1,462,202 thousand yuan and contract liabilities compared with the inflow of 2019 years due to the new inventory of Nanrong Development and Construction in 2020 Decrease by 2,023,647 thousand yuan), resulting in lower cash flow and reinvestment ratio;

(8) Operating leverage: The operating income in 2020 fell by 12.75% compared with that in 2019, and the operating profit in 2020 increased by 43.99% compared with that in 2019, resulting in a decrease in operating leverage. 。

2 、 Financial Analysis -Parents Only

	Year	Year	Financial Analysis for the	Financial Analysis for the	Financial Analysis for the	Past Five Years	Past Five Years
								As of March	Percentage in	Remark
item			2020	2019	2018	2017	2016	31, 2021	last two years	s
Financial structure (%)	Debt Ratio		49.38	46.20	50.24	47.53	42.09		6.88
	Ratio of long-term capital to property, plant and equipment		199.21	200.22	198.37	209.97	229.13	“	(0.50)
Solvency (%)	Current ratio		46.85	33.30	43.97	49.71	51.06	“	40.69	(1)
	Quick ratio		38.90	23.53	35.55	38.00	42.02	“	65.32	(1)
	Interest earned ratio (times)		12.37	12.33	3.41	9.24	22.03	“	0.32
Operatin g performa nce	Accounts receivable turnover(times)		4.97	5.36	5.04	6.13	5.59	“	(7.28)
	Average collection period		73	68	72	60	65	“	7.35
	Inventory turnover (times)		6.57	7.47	5.89	7.02	6.68	“	(12.05)
	Accounts payable turnover(times)		15.40	21.18	15.84	18.84	18.17	“	(27.29)	(2)
	Average days in sales		56	49	62	52	55	“	14.29
	Property, plant and equipment turnover (times)		1.04	1.14	0.97	1.16	0.98	“	(8.77)
	Total assets turnover (times)		0.29	0.33	0.28	0.33	0.26	“	(12.12)
Profitabil ity Cash flow	Return on total assets (%)		4.46	6.02	1.28	3.50	5.40	“	(25.91)	(3)
	Return on stockholders' equity (%)		7.86	10.77	1.72	5.66	8.77	“	(27.02)	(3)
	Pre-tax income to paid-in capital (%)	Profit ratio(%)	7.24	5.37	0.99	5.51	3.97	“	34.82	(4)
		Earnings per share (NT$)	12.73	15.28	3.01	9.20	16.21	“	(16.69)
	Profit ratio(%)		13.58	16.65	3.18	9.51	19.72	“	(18.44)
	Earnings per share (NT$)		1.05	1.42	0.23	0.79	1.25	“	(26.06)	(3)
	Cash flow ratio (%)		14.80	8.02	4.66	2.69	6.09	“	84.54	(5)
	Cash flow adequacy ratio(%)		46.35	41.82	40.75	52.35	78.48	“	10.83

	Cash reinvestment ratio(%)	2.12	0.28	(0.60)	(2.97)	1.15	“	657.14
Financial structure (%)	Operating leverage	2.48	2.96	10.88	2.71	3.34	“	(16.22)
	Profit ratio (%)	1.18	1.34	(3.86)	1.25	1.24	“	(11.94)
Remarks:

(1) Liquidity and quick ratio: Financial assets measured at fair value through profit and loss in 2020 years increased by 2,248,067 thousand yuan compared with last year, which affected the significant increase in current assets in 2020 by 68.54% compared with that in 2019 years, which is conducive to liquidity and quick ratio Changes reached 40.69%, 65.32%;
(2) Payable turnover rate: Mainly due to the decline in revenue in 2020, the relative cost of goods sold decreased by 12.94% compared with the change in 2019 years, resulting in a decrease in the turnover rate of accounts payable;
(3) Profitability ratio: The profitability of 2020 years decreased by 291,306 thousand yuan compared with that of 2019 years, which is not conducive to the return on assets, equity and other profitability ratios and profitability ratios such as operating profit and earnings per share;
(4) Operating profit ratio: Although the revenue in 2020 years declined by 8.84%, due to the proper control of material costs and management and sales expenses, the operating profit ratio increased by 116,012 thousand yuan compared with that in 2019 years, resulting in a favorable change in operating profit ratio of 34.82%;
(5) Cash flow and cash reinvestment rate: The net cash inflow from operating activities in 2020 years increased by 764,982 thousand yuan compared with that in 2008 (mainly due to adjustments to the share of profits and losses of subsidiaries and affiliates using the equity method, which increased by 711,746 thousand yuan compared with that in 2008), To increase the cash flow rate and cash reinvestment ratio in 2020 years.
Financial structure
(1) Liabilities to assets ratio = total liabilities/total assets.
(2) The ratio of long-term funds to real property, plant and equipment = (total equity + non-current liabilities)/net of real property, plant and equipment.
Solvency
(1) Current ratio = current assets/current liabilities.
(2) Quick ratio = (current assets-inventory-prepaid expenses) / current liabilities.
(3) Interest protection multiple = Net profit before income tax and interest expense/Interest expense in the current period.
Operating ability
(1) Accounts receivable (including accounts receivable and notes receivable due to business) turnover rate = net sales/average receivables for each period (including accounts receivable and notes receivable due to business) Notes receivable) balance.
(2) Average number of days for cash collection = 365/ turnover rate of accounts receivable.
(3) Inventory turnover rate = cost of goods sold/average inventory value.
(4) Accounts payable (including accounts payable and bills payable due to business) turnover rate = cost of goods sold/average payables (including accounts payable and bills payable due to business) balance in each period.
(5) Average sales days=365/inventory turnover rate.
(6) Turnover rate of real estate, plant and equipment = net sales/average net real estate, plant and equipment.
(7) Turnover rate of total assets = net sales/total average assets.
Profitability
(1) Return on assets = [After-tax profit and loss + interest expense x (1-tax rate)] / average total assets.
(2) Return on equity = after-tax profit and loss/average total equity.
(3) Net profit rate = after-tax profit and loss/net sales.
(4) Earnings per share = (Profit and loss attributable to owners of the parent company-special stock

dividends)/weighted average number of issued shares. (Note 4)

Cash flow
(1) Cash flow ratio = net cash flow from operating activities/current liabilities.
(2) Net cash flow allowable ratio = net cash flow from operating activities in the last five years/(capital expenditure + increase in inventory + cash dividends) in the last five years.
(3) Cash reinvestment ratio = (net cash flow from operating activities-cash dividends) / (gross real estate, plant and equipment + long-term investment + other non-current assets + working capital). (Note 5)
Leverage:
(1) Operating leverage = (net operating income-variable operating costs and expenses) / operating profit (Note 6).
(2) Financial leverage = operating profit/(operating profit-interest expense).

100

三、 Audit Committee’s Review Report

The Board of Directors has prepared the Company's 2020 Business Report, Financial Statements, and proposal for allocation of earnings.

The CPA firm of Baker Tilly Clock & Co was retained to audit Nankang's Financial Statements and has issued an audit report relating to the Financial Statements.

The Business Report, Financial Statements, and earnings allocation proposal have been reviewed and determined to be correct and accurate by the Audit Committee members of Nankang Rubber Tire CORP., LTD. According to relevant requirements of the Securities and Exchange Act and the Company Law, we hereby submit this report.

Nankang Rubber Tire CORP., LTD.

Chairman of the Audit Committee

Wu, Si-Yi

==> picture [188 x 78] intentionally omitted <==

March 10, 2021

101

Consolidated Financial Statements and Independent Auditors’ Report
along with Parent Company Only Financial Statements and Independent Auditors’ Report

(English Translation of Consolidated Financial Statements

and Report Originally Issued in Chinese)

[NANKANG RUBBER TIRE CORP., LTD. ]

AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

AND INDEPENDENT AUDITORS' REPORT FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Address: Suite 608, No.136, Sec.3, Jen Ai Rd., Taipei City, Taiwan

(R.O.C.)

Phone : (886-2) 2707-1000

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

DECLARATION OF CONSOLIDATION OF FINANCIAL

STATEMENTS OF AFFILIATES

The entities that are required to be included in the combined financial statements of Nankang Rubber Tire Corp., Ltd. As of and for the year ended December 31, 2020, under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with the International Financial Reporting Standard 10, “Consolidated Financial Statements,” In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, Nankang Rubber Corp., Ltd. And subsidiaries do not prepare a separate set of combined financial statements.

Very truly yours,

NANKANG RUBBER TIRE CORP., LTD.

CHANG-PING, CHANG

Chairman

March 10, 2021

INDEPENDENT AUDITORS' REPORT

NO.00031090ECA

To the Board of Directors of Nankang Rubber Tire Corp., Ltd.

Opinion

We have audited the accompanying consolidated financial statements of Nankang Rubber Tire Corp., Ltd. and its subsidiaries (collectively referred to as “the Company”), which comprise the consolidated balance sheets as of December 31, 2020 and 2019, the consolidated statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2020 and 2019, and the notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2020 and 2019, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (“IFRSs”), International Accounting Standards (“IASs”), interpretations as well as related guidance endorsed by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most

significance in our audit of the consolidated financial statements for the year ended December 31, 2020. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters for the Company’s consolidated financial statements for the year ended December 31,2020 are explained as follows:

Inventory valuation

The consolidated inventory amount of the company totaled NT$9,965,305 thousand accounted for 31% of the total assets, in which the inventory of tire manufacturing was NT$1,223,175 thousand and the construction in progress of the construction and development was NT$8,742,130 thousand. Regarding the accounting policies for the inventory, please refer to Note 4(11) of the Consolidated Financial Report.

The inventory valuation of the company is measured at the cost and net realizable value, whichever is lower. The profitability of the tire industry is directly influenced by the price fluctuation of the main material, the natural rubber. Thus, the international price fluctuation of the material has the uncertain factors due to the external economic environment. In addition, the construction division of the subsidiary was still under development and the amount of construction in progress accounted for 88% of the consolidated inventory, resulted in the decrease in the consolidated inventory turnover. However, the valuation of the inventory’s net realizable value is relevant to the major judgments and estimates and the inventory amount is significant to the consolidated report. Thus, we believe that the inventory valuation of the company shall be listed as one of the most important matters for audit in this year.

The corresponding audit process we perform mainly for the above key audit matters is as follows:

Confirm that the purchase of the company and the subsidiaries all undergo the procedure of inquiry, parity and price negotiation by testing the control points related to the internal control of the purchase.
Assess the reasonableness regarding the inventory valuation and the allowance policy for inventory devaluation and obsolescence loss of the Consolidated Company.

Confirm the reasonableness of the net realizable value by the random checking and calculating the inventory valuation of the Consolidated Company based on the information.
Confirm the completeness of the allowance for inventory devaluation and obsolescence loss of the Consolidated Company by assessing the inventory conditions of the annual inventory and aging inventory analysis.
Aim at the investment in the construction in progress to conduct sampling inspection for relevant costs and confirm the appropriate attribute and classification to understand the progress of the construction and the reasonableness of the construction investment. Also assess the reasonableness regarding the book value of the land and construction in progress which has no impairment.

Impairment of property, plant and equipment

The property, plant and equipment of the Company as of December 31, 2020 was NT$8,278,421 thousand, which accounted for 26% of the total assets. Regarding the accounting policies for the impairment of the non-financial assets, please refer to Note 4(18) to the consolidated financial report.

The management of the Company regularly assesses whether the property, plant and equipment has any sign of impairment. Given the recoverable amount of each cash-generating unit measured during the impairment assessment involves many assumptions and estimates, the estimation method may have direct impact on and change the result of the recoverable amount measurement. Also, the amount of the property, plant and equipment is significant to the consolidated report, therefore we believe that the impairment assessment for the property, plant and equipment of the Company shall be listed as one of the most important matters for auditing this year.

The corresponding audit process we perform mainly for the above key audit matters is as follows:

Understand, analyze, and assess the reasonableness regarding the cash-generating unit identified by the management of the Company and the subsidiaries which has no sign of impairment.
Assess and analyze the assumptive data of the impairment test, including the cash flow forecast and discount rate, to confirm the appropriateness of each assumptive data.

Other Matter

We have also audited the parent company only financial statements of Nankang Rubber Tire Corp., Ltd as of and for the years ended December 31, 2020 and 2019 on which we have issued an unmodified opinion.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs, IASs, interpretations as well as related guidance endorsed by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, (including members of the Audit Committee), are responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material

misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial

statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2020 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Baker Tilly Clock & Co

Ying-Lai Chou , CPA

Kuo-Fu Tseng, CPA

March 10, 2021

Notes to Readers

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

NANKANG RUBBER TIRE CORP., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2020 and 2019

(In Thousands of New Taiwan Dollars)

ASSETS	NOTES	December 31,2020	December 31,2020	December 31,2019	December 31,2019
		Amount	`％`	Amount	`％`
CURRENT ASSETS Cash and cash equivalents Financial assets at fair value through profit or loss-current Notes receivable,net Accounts receivable,net Other receivables Other receivables from related parties Current tax assets Inventories Prepayments Other current financial assets Other current assets,others Total current assets NONCURRENT ASSETS Investment accounted for using equity method Property, plant and equipment Right-of-use assets Investment property,net Intangible assets Deferred tax assets Prepayments for business facilities Refundable deposits Total noncurrent assets	6 7 8 8 29 9 10,30 11 12 13 14 15 26	$ 3,972,357 2,351,265 444,085 1,775,020 96,029 `－` 442 9,965,305 255,645 2,665,926 738,992	13 7 1 6 `－` `－` `－` 31 1 8 3	$ 2,471,790 103,198 211,973 2,149,820 80,236 120,000 19,208 8,556,850 172,800 3,748,731 40,250	9 `－` 1 8 `－` `－` `－` 31 1 14 `－`
		22,265,066	70	17,674,856	64
		815,998 8,278,421 207,728 331,346 2,348 21,844 92,506 9,883	2 26 1 1 `－` `－` `－` `－`	990,469 8,283,229 198,437 331,375 2,327 27,047 106,058 28,493	4 30 1 1 `－` `－` `－` `－`
		9,760,074	30	9,967,435	36
TOTAL		$ 32,025,140	100	$ 27,642,291	100

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

NANKANG RUBBER TIRE CORP., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2020 and 2019

(In Thousands of New Taiwan Dollars)

LIABILITIES AND EQUITY	NOTES	December 31,2020	December 31,2020	December 31,2019	December 31,2019
		Amount	`％`	Amount	`％`
CURRENT LIABILITIES Short-term borrowings Short-term notes and bills payable Fanancial liabilities at fair value through profit or loss-current Contract liability Notes payable Accounts payable Other payables Current tax liabilities Provisions-current Lease liabilities-current Current portion of long-term borrowings Other current liabilities,others Total current liabilities NONCURRENT LIABILITIES Long-term borrowings Deferred tax liabilities-land value increment tax Deferred tax liabilities-income tax Lease liabilities-noncurrent Net defined pension liabilities Other non-current liabilities Total noncurrent liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY Capital stock Capital EARNINGS Retained earnings Legal reserve Special reserve Unappropriated earnings Other equity Treasury shares Total equity attributable to owners of the Company NON-CONTROLLING INTERESTS Total equity	16 17 7 24 18 19 14 20 20 26 26 14 21 22(1) 22(2) 22(3) 22(4) 23	$ 6,893,034 479,613 99 5,323,695 18,531 548,620 687,076 273,115 10,100 14,712 789,242 81,257	21 1 `－` 17 `－` 2 2 1 `－` `－` 3 `－`	$ 7,417,622 249,708 481 3,663,645 14,718 326,550 681,113 140,536 9,300 11,898 2,915,561 83,079	27 1 `－` 13 `－` 1 2 1 `－` `－` 11 `－`
		15,119,094	47	15,514,211	56
		5,189,042 733,196 89,385 15,210 90,845 1,061	16 3 `－` `－` `－` `－`	499,848 733,196 67,779 4,156 112,596 1,614	2 3 `－` `－` `－` `－`
		6,118,739	19	1,419,189	5
		21,237,833	66	16,933,400	61
		8,339,349 18,970 3,196,579	26 `－` 10	8,339,349 18,970 3,230,109	30 `－` 12
		348,586 2,302,896 545,097	1 7 2	249,984 2,302,896 677,229	1 8 3
		175,638 (943,229)	1 (3)	63,692 (943,229)	`－` (3)
		10,787,307	34	10,708,891	39
		`－`	`－`	`－`	`－`
		10,787,307	34	10,708,891	39
TOTAL		$32,025,140	100	$27,642,291	100

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

NANKANG RUBBER TIRE CORP., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED ON DECEMBER 31, 2020 AND 2019

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

DESCRIPTION	NOTE	2020	2020	2019	2019
		Amount	`％`	Amount	`％`
OPERATING REVENUES OPERATING COSTS GROSS PROFIT BEFORE UNREALIZED GROSS UNREALIZED PROFIT FROM SALES REALIZED PROFIT ON FROM SALES GROSS PROFITFROM OPERATIONS OPERATING EXPENSES Selling and marketing expenses General and administrative expenses Research and development expenses Expected credit impairment losses Total operating expenses INCOME FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Interest income Other income Other gains and losses Finance costs Share of profits of associates accounted for using equity method Total non-operating income and expenses INCOME BEFORE INCOME TAX INCOME TAX EXPENSE NET INCOME OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss Remeasurement of defined benefit obligation Income tax benefit (expense) related to items that will not be reclassified subsequently Items that may be reclassified subsequently to profit or loss Exchange differences on translation of foreign operations Income tax relating to the components of other comprehensive income(loss) Other comprehensive (loss) income, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR NET INCOME ATTRIBUTABLE TO`：` Shareholders of the parent Non-controlling interests TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO`：` Shareholders of the parent Non-controlling interests EARNING PER SHARE Basic Diluted	24 9 29 29 25(1) 25(2) 25(3) 12 26 21 26 27	$ 9,695,119 (7,364,738)	100 (76)	$ 11,111,580 (9,053,695)	100 (81)
		2,330,381	24	2,057,885	19
		(876) 1,039	`－` `－`	(1,039) 662	`－` `－`
		2,330,544	24	2,057,508	19
		(793,842) (412,620) (94,446) (546)	(8) (4) (1) `－`	(836,229) (395,381) (110,711) (482)	(8) (4) (1) `－`
		(1,301,454)	(13)	(1,342,803)	(13)
		1,029,090	11	714,705	6
		28,034 95,065 244,759 (99,229) (176,634)	`－` 1 3 (1) (2)	31,933 74,528 39,420 (134,243) 608,860	`－` 1 `－` (1) 6
		91,995	1	620,498	6
		1,121,085 (276,707)	12 (3)	1,335,203 (199,519)	12 (2)
		$ 844,378	9	$ 1,135,684	10
		5,708 (1,142) 111,946 `－`	`－` `－` 1 `－`	2,566 (513) (241,464) `－`	`－` `－` (2) `－`
		116,512	1	(239,411)	(2)
		$ 960,890	10	$ 896,273	8
		$ 844,378 `－`	9 `－`	$ 1,135,684 `－`	10 `－`
		$ 960,890 `－`	10 `－`	$ 896,273 `－`	8 `－`
		$ 1.05 $ 1.05		$ 1.42 $ 1.42

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

NANKANG RUBBER TIRE CORP., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(In Thousands of New Taiwan Dollars)

			(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
DESCRIPTION			Equityattributable to the owners of the Company						Non- controlling interests	Total equity
	Capital Stock	Capital EARNINGS	Retained earnings			Other equity	Treasury shares	Subtotal
			Legal reserve	Special reserve	Unappropriated earnings	Exchange differences on translation of foreign operations
BALANCE, JANUARY 1, 2019	$ 8,339,349	$ 18,970	$ 172,730	$ 2,302,896	$ 178,403	$ 305,156	$ (943,229)	$ 10,374,275	$ `－`	$ 10,374,275
Appropriations of prior year’s earnings Legal reserve Cash dividends Net income in 2019 Other comprehensive income in 2019, net of income tax Total comprehensive income in 2019	`－` `－` `－` `－`	`－` `－` `－` `－`	77,254 `－` `－` `－`	`－` `－` `－` `－`	(77,254) (561,657) 1,135,684 2,053	`－` `－` `－` (241,464)	`－` `－` `－` `－`	`－` (561,657) 1,135,684 (239,411)	`－` `－` `－` `－`	`－` (561,657) 1,135,684 (239,411)
	`－`	`－`	`－`	`－`	1,137,737	(241,464)	`－`	896,273	`－`	896,273
BALANCE, DECEMBER 31, 2019	8,339,349	18,970	249,984	2,302,896	677,229	63,692	(943,229)	10,708,891	`－`	10,708,891
Appropriations of prior year’s earnings Legal reserve Cash dividends Net income in 2020 Other comprehensive income in 2020, net of income tax Total comprehensive income in 2020	`－` `－` `－` `－`	`－` `－` `－` `－`	98,602 `－` `－` `－`	`－` `－` `－` `－`	(98,602) (882,474) 844,378 4,566	`－` `－` `－` 111,946	`－` `－` `－` `－`	`－` (882,474) 844,378 116,512	`－` `－` `－` `－`	`－` (882,474) 844,378 116,512
	`－`	`－`	`－`	`－`	848,944	111,946	`－`	960,890	`－`	960,890
BALANCE, DECEMBER 31, 2020	$ 8,339,349	$ 18,970	$ 348,586	$ 2,302,896	$ 545,097	$ 175,638	$ (943,229)	$ 10,787,307	$ `－`	$ 10,787,307

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

NANKANG RUBBER TIRE CORP., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED ON DECEMBER 31, 2020 AND 2019

(In Thousands of New Taiwan Dollars)

DESCRIPTION	2020	2019
CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Income and expense (loss) items Depreciation expense Amortization expense Expected credit impairment losses Net gain on financial assets and liabilities at fair value through profit or loss Interest expense Interest income Dividend income Share of profit of associates accounted for using equity method Loss on disposal or retirement of property, plant and equipment, net Loss on disposal of investments Unrealized profit from sale Realized profit on from sale Other adjustments to reconcile loss Changes in operating assets and liabilities Financial assets at fair value through profit or loss Notes receivable Notes receivable from related parties Accounts receivable Accounts receivable from related parties Other receivables Inventories Prepayments Other current assets The incremental cost of obtaining the contract Financial liabilities at fair value through profit or loss Contract liability Notes payable Accounts payable Other payables Provisions Other current liabilities Accrued pension liabilities Cash generated from operations Interest received Interest paid Income taxes paid Net cashgenerated byoperatingactivities	$ 1,121,085 787,593 422 546 (425,498) 99,229 (28,034) (9,033) 176,634 7,747 `－` 876 (1,039) 26,791 (315) (228,524) (93) 335,946 6,341 (18,017) (1,401,312) (81,770) 528 (699,315) `－` 1,660,707 3,813 216,843 12,549 800 (935) (16,043)	$ 1,335,203 874,874 363 18,961 (22,438) 134,243 (31,933) (6,022) (608,860) 12,641 180 1,039 (662) 6,286 (9,068) (24,920) 1,464 (127,818) (6,992) (18,048) (167,996) (11,741) 7,090 (23,570) (2,815) 3,616,173 8,619 (63,727) 6,047 900 5,083 (16,789)
	1,548,522 29,693 (101,403) (99,929)	4,885,767 34,275 (138,514) (518,817)
	$ 1,376,883	$ 4,262,711

(Continued)

NANKANG RUBBER TIRE CORP., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED ON DECEMBER 31, 2020 AND 2019

(In Thousands of New Taiwan Dollars)

DESCRIPTION	2020	2019
CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of financial assets at fair value through profit or loss Proceeds from disposal of financial assets at fair value through profit or loss Acquisition of investments accounted for under the equity method Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease (increase) in Refundable Deposits Decrease in other receivables due from related parties Purchase of Intangible Assets Decrease (increase) in other financial assets Decrease (increase) in prepayments for business facilities Dividends received from other investment Net cash generated by (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in short-term borrowings Increase (decrease) in short-term notes and bills payable Increase in long-term borrowings Decrease in long-term borrowings Increase (decrease) in guarantee deposits received Repayment of the principal portion of lease liabilities Cash dividends Net cash generated by (used in) financing activities EFFECT OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH AND CASH EQUIVALENTS HELD IN FOREIGN CURRENCIES NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD CASH AND CASH EQUIVALENTS AT END OF THE PERIOD	$ (2,438,183) 615,552 (2,000) (763,945) 4,055 18,605 120,000 (407) 1,083,743 13,552 9,033	$ `－` `－` `－` (898,190) 4,575 (1,627) `－` (577) (3,659,963) (65,503) 6,022
	(1,339,995)	(4,615,263)
	(531,731) 229,905 5,578,435 (3,015,561) (580) (14,449) (882,453)	818,989 (64,914) 780,000 (857,623) (1,028) (13,390) (561,637)
	1,363,566	100,397
	100,113	(103,786)
	1,500,567 2,471,790	(355,941) 2,827,731
	$ 3,972,357	$ 2,471,790

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

NANKANG RUBBER TIRE CORP., LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(Amounts in thousands of New Taiwan dollars, unless otherwise stated)

1.ORGANIZATION AND OPERATIONS

Nankang Rubber Tire Corp., Ltd. was established in February 1959 and is mainly involved in the manufacturing and selling of tires and various rubber supplies. In November 1963, the stocks of the Company were approved by the Financial Supervisory Commission (FSC) for listing on the Taiwan Stock Exchange.

The consolidated financial report were included Nankang Rubber Tire Corp., Ltd. and its subsidiaries collectively as the “Company” are described in Note 4.

The consolidated financial report is expressed in New Taiwan Dollars, the functional currency adopted by Nankang Rubber Tire Corp., Ltd.

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the board of directors and authorized for issue on March 10, 2021.

3. APPLICATION OF NEW AND REVISED STANDARDS, AMENDMENTS AND

INTERPRETATIONS

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

New standards, interpretations and amendments endorsed by FSC effective from 2020

are as follows：

are as follows：
New, Revised or Amended Standards and Interpretations Amendments to IAS 1 and IAS 8, ‘Disclosure initiative-definition of material’ Amendments to IFRS 3, ‘Definition of a business’ Amendments to IFRS 9 and IAS 39 and IFRS 7, ‘Interest rate bechmark reform’ Amendment to IFRS 16, ‘Covid-19-related rent concessions’	Effective Date Issued byIASB
	January 1, 2020 January 1, 2020 January 1, 2020 June 1, 2020

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

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

adopted by the Group

adopted by the Group
New, Revised or Amended Standards and Interpretations Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9” Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform -Phase 2”	Effective Date Issued byIASB
	January 1, 2021 January 1, 2021

The Company evaluated that the adoption of the aforementioned IFRSs would not have any material impact on the consolidated financial report.

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

IFRSs issued by IASB but not yet endorsed by the FSC

New, Revised or Amended Standards and Interpretations
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of
Assets between An Investor and Its Associate or Joint Venture”

Amendments to IFRS 3 “Reference to the Conceptual Framework”
IFRS 17 “Insurance Contracts”
Amendments to IFRS 17
Amendments to IAS 1 “Classification of Liabilities as Current or
Non-current”
Amendments to IAS 16 “Property, Plant and Equipment - Proceeds
before Intended Use”
Amendments to IAS 37 “Onerous Contracts–Cost of Fulfilling a
Contract”

Effective Date Issued
byIASB

To be determined by IASB
January 1, 2022
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2022
January 1, 2022

The Company continues to assess the impact of the aforementioned standards and

interpretations on the financial status and business result of the Company, and relevant

impacts will be disclosed after the completion of the assessment.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Statement of compliance

The consolidated financial statements have been prepared in accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, IFRSs, IASs, Interpretations as well as related guidance translated by the ARDF endorsed by the FSC with the effective dates (collectively, “IFRSs”).

(2) Basis of Preparation

The consolidated financial statements have been prepared on the historical cost basis except for financial instruments that are measured at fair value. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

(3) Basis of Consolidation

A. The basis for the consolidated financial statements

The consolidated financial statements incorporated the financial statements of Nankang Rubber Tire Corp., Ltd. and its controlled entities (the subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Company.

All intra-company transactions, balances, income and expenses are eliminated in full on consolidation.

B. The Subsidiaries in the consolidated financial statements:

Name of Investor	Name of Investee	Main Businesses and Products	Establishment and OperatingLocation
Nankang Rubber Tire Corp., Ltd. Nankang Rubber Tire Corp., Ltd. Nankang Rubber Tire Corp., Ltd. Nankang Rubber Tire Corp., Ltd. Nankang Rubber Tire Corp., Ltd. Nankang Rubber Tire (Singapore) Pte. Ltd. Nankang International Co., Ltd.	Nanzong Construction Developments, Co., Ltd. Taipei NanHung Rubber Tire Corp. Ltd. Nankang Rubber Tire (Singapore) Pte. Ltd. Nankang International Co., Ltd. Nankang Tire Netherlands B.V Nankang (ZhangJiaGang Free Trade Zone) Rubber Industrial Co.Ltd. Nankang (ZhangJiaGang Free Trade Zone) Rubber Industrial Co.Ltd.	Professional asset management All kinds of tire transactions Reinvestment of other businesses and all kinds of tire transactions Reinvestment of other businesses and all kinds of tire transactions Information collection and all kinds of tire transactions Reinvestment of other businesses and production and marketing of auto and motorcycle tires Reinvestment of other businesses and production and marketing of auto and motorcycle tires	Taiwan Taiwan Singapore Seychelles Nederland Zhang Jiagang Free Trade Zone, Jiangsu Province, China Zhang Jiagang Free Trade Zone, Jiangsu Province, China

Name of Investee	Percentage of Ownership	Percentage of Ownership
	December 31,2020	December 31,2019
Nanzong Construction Developments, Co., Ltd.	100%	100%

Taipei NanHung Rubber Tire Corp. Ltd.	100%	100%
Nankang Rubber Tire (Singapore) Pte. Ltd.	100%	100%
Nankang International Co., Ltd.	100%	100%
Nankang Tire Netherlands B.V	100%	100%
Nankang (ZhangJiaGang Free Trade Zone)	100%	100%
Rubber Industrial Co.Ltd.

C. Subsidiaries excluded from consolidated financial statement: None.

D. Other information: None.

(4) Foreign Currencies

In preparing the financial statements of each individual consolidated entity, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising on the retranslation of non-monetary items are recognized in profit or loss for the year except for exchange difference arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income, in which case, the exchange differences are also recognized directly in other comprehensive income.

Non-monetary items that are measured at historical cost in a foreign currency are not retranslated.

For the purposes of presenting consolidated financial statements, the assets and liabilities of the Consolidated Company’ foreign operations are translated into New Taiwan dollars using exchange rates prevailing at each balance sheet date. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising, if any, are recognized in other comprehensive income and accumulated in equity.

On the disposal of a foreign operation (i.e., a disposal of the Company’s entire interest in a foreign operation, or a disposal involving the loss of control over a subsidiary that includes a foreign operation, or a partial disposal of an interest in an associate that includes a foreign operation of which the retained interest becomes a financial asset), all of the exchange differences accumulated in equity in respect of that operation attributable to the owners of the Company are reclassified to profit or loss.

(5) Classification of Current and Noncurrent Assets and Liabilities

The current assets are assets that are held primarily for the purpose of trading and the assets, cash and cash equivalents (excluding those restricted for exchanging or liquidating liabilities over 12 months after the end of reporting period ) expected to be realized within 12 months at the end of reporting period. Assets not attributed to current assets are the non-current assets.

The current liabilities are liabilities that are held primarily for the purpose of trading, expected to be settled within 12 months after the end of reporting period and those not having an unconditional right to defer settlement beyond 12 months after the end of reporting period. Liabilities not attributed to current liabilities are the non-current liabilities.

For the part of the Company responsible for the construction work with an operating cycle longer than a year, assets and liabilities with respect to the construction business are classified as current or non-current with the normal operating cycle as the standard.

(6) Cash equivalents

Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Including one-year time deposits and three-month investment are held for the purpose of meeting short-term cash commitments in operation.

(7) Financial Instruments

Financial assets and financial liabilities are recognized when the Company become a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction

costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.

Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

(8) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or Convention in the marketplace.

A . Measurement category

Financial assets are classified into the following categories: financial assets at fair value through profit or loss (“FVTPL”) and financial assets at amortized cost. a) Financial asset at FVTPL

Financial assets at FVTPL includes the financial assets mandatorily classified as at FVTPL. Financial assets at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss. Fair value is determined in the manner described in Note 35.

b) Measured at amortized cost

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

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

Cash and cash equivalents, notes and accounts receivable, other receivables and

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

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

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

At the end of each reporting period, a loss allowance for expected credit loss is recognized for financial assets at amortized cost.

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

The expected credit loss is calculated according to the average weighted credit loss in which the risk rated ratio of default occurrence is used in calculation. The 12-

month expected credit loss represents the credit loss expected to occur to the financial instruments within 12 months after their reporting day due to possible default. The expected credit loss in the duration period refers to the credit loss expected to occur to the financial instruments in the expected duration period due to possible default.

The Company recognizes an impairment loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.

C. Derecognition of financial assets

The Company derecognize a financial asset only when the contractual rights to the cash flows from the asset expire, or when they transfer the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss.

(9) Financial liabilities & Equity instruments

Debt and equity instruments issued by a group entity are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

A. Equity instruments

Equity instruments issued by a group entity are recognized at the proceeds received, net of direct issue costs.

Repurchase of the Company’s own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments.

B. Financial liabilities

Financial liabilities other than those held for trading purposes and designated as at FVTPL are subsequently measured at amortized cost at the end of each reporting period.

Financial liabilities measured at FVTPL are derivative financial instruments that do not meet the criteria for hedge accounting, and they are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. Related net profits or net losses are listed in “other profits and losses” of the statement of comprehensive income.

1) Derecognition of financial liabilities

The Company derecognizes financial liabilities only when the obligations are discharged cancelled or expires. The difference between the carrying amount of a financial liability removed and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

2) Offsetting financial instruments
Financial assets and liabilities are offset and reported in the net amount in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.

(10) Derivative financial instruments

The Company enters into a variety of derivative financial instruments to manage its exposure to foreign exchange rate risks, including foreign exchange forward contracts. Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship. When the fair value of derivative financial instruments is positive, the derivative is recognized as a financial asset; when the fair value of derivative financial instruments is negative, the derivative is recognized as a financial liability.

(11) Inventories

Inventories are stated at the lower of cost or net realizable value. Inventories are recorded at weighted-average cost. Net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale.

The inventory of the construction business includes the construction site and constructions in progress and the costs of each construction is calculated separately based on the recognized acquisition cost or construction cost. For the construction in progress, the interest expenses borne before the completion of the construction shall be capitalized as a part of the construction cost.

(12) Investments Accounted for Using Equity Method

Investments accounted for using the equity method are investments in associates. An associate is an entity over which the Company has significant influence and that is neither a subsidiary nor a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

Besides classified as non-current assets available for sale, the business result, assets and liabilities of the affiliated company shall be included in the consolidated financial report. Under the equity method, investment in the affiliated companies is recognized at the costs initially in the consolidated balance sheet and is adjusted subsequently according to the changes in the Company’s shares of the invested company’s net assets. In the event that the Company’s shares of loss in the affiliated companies exceed its equity in the affiliated companies, the Company recognizes extra losses only in the event of occurrence of legal obligations, presumed obligations or within the scope that the Company made payment on behalf of the affiliated companies.

Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets,liabilities and contingent liabilities of an associate recognized at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment. Any excess of the Company’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss.

When a consolidated entity transacts with an associate, profits and losses resulting from the transactions with the associate are recognized in the Company’s consolidated financial statements only to the extent of interests

in the associate that are not owned by the Company.

(13) Investment properties

Only if investment properties is attempted for earning rental or capital appreciation or both may it be classified as the investment properties.Investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation and accumulated impairment loss. Depreciation is recognized using the straight-line method.

(14) Property, Plant, and Equipment

Property, plant and equipment are stated at cost, less subsequent accumulated depreciation and subsequent accumulated impairment loss.

Properties under construction for production, supply or administrative purposes are carried at cost, less any recognized impairment loss. Cost includes professional fees and borrowing costs eligible for capitalization.

These properties are depreciated and classified to the appropriate categories of property, plant and equipment when completed and ready for intended use.

Depreciation is recognized using the straight-line method. Each significant item is depreciated separately. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

Depreciation is computed by the straight-line method over the estimated useful lives. The estimated useful lives are as follows:

Buildings: 5 to 50 years; machinery and equipment: 8 to 12 years; transportation equipment: 4 to 6 years; leasehold improvements:2 years; other equipment: 5 to 10 years.

Assets held under financial lease are depreciated within the useful years in the same manner as their own assets. Those with shorter lease terms are depreciated within the lease term.

Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying

amount of the asset and is recognized in profit or loss.

(15)Leases

A. The Company as lessor

Under the operating lease, the rent less the lease incentives was recognized as income based on the straight-line basis in the duration of the leasehold. The original direct cost generated from acquisition of the operating lease is the book amount added to the underlying asset and is recognized as expense during the duration of leasehold on the straight-line basis.

B. The Company as lessee

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

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentive received. Rightof-use assets are subsequently measured as cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities.

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

Lease liabilities are initially measured at the present value of the lease payments. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses the lessee’s incremental borrowing rate.

determine to those payments, the Company remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. If the carrying amount of the right-of-use assets has been reduced to zero, the remaining amount will recognized in profit or loss.

(16) Intangible Assets

The intangible assets with limited useful life individually acquired are measured at costs less accumulated amortization and impairment. The amount of amortization is calculated based on the following useful years under a straight-line method: the validity or contract term of the right of patent usage for the technology royalty; the charge for computer software usage is 2 to 5 years. The estimated useful life and amortization method is reviewed at the end of each fiscal year and any impact of changes in estimates is deferred.

(17) Incremental costs of obtaining a contract

For the sale of property, the sale service fee of the underwritten contract payment only incurs upon the acquisition of the customer’s contract and is recognized as the additional costs for the acquisition of contract within the range of expected recoverable amount and will be reclassified as expenses upon the recognition of the revenue of buildings and land.

(18) Impairment of Non-financial Assets

At each balance sheet date, the Company review the carrying amounts of their tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimate the recoverable amount of the cash-generating unit to which the asset belongs. When amortization can be reasonably and consistently made, common assets can also be amortized to individual cash production units. Otherwise, the amortization shall be made to the minimum cash production unit group in a reasonable and consistent way. Intangible assets with indefinite useful lives and intangible assets not yet available for

use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. An impairment loss is recognized in profit or loss.

When an impairment loss subsequently is reversed, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.

(19) Provision

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

(20) Revenue Recognition

Upon identification of the performance obligation in the contract with customers, the Company amortizes the transaction price to the performance obligations in the contract and recognizes the revenue upon fulfilling performance obligation of the contract. The sales revenue of the product is generated from the sale of the tire products. Upon arrival or shipment of the product to the destination designated by customers, the customers have already owned the right to set the price and use the same and taken the responsibility for resale. Thus, the Company recognized the revenue at that moment.

(21) Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are added to the cost of these assets, until the assets are substantially

ready for their intended use or sale.

If a specific loan is used for temporary investment before being applied to the capital expenditure meeting required elements and therefore earns the investment income, it shall be deducted from the loan cost meeting the terms of capitalization.

All other borrowing costs are recognized in profit or loss in the period in which they are incurred.

(22) Employee Benefits

Short-term employee benefit obligation is measured on an undiscounted basis and is recognized as expense when the related services are provided. For the short-term cash bonus or the amounts expected to be paid under the bonus plan of, if the enterprise has a present statutory or presumed benefit obligation due to the services provided by employees before and the obligation can be estimated reliably, the amount is recognized as a liability.

For defined contribution retirement benefit plans, payments to the benefit plan are recognized as an expense when the employees have rendered service entitling them to the contribution. For defined benefit retirement benefit plans, the cost of providing benefit is recognized based on actuarial calculations.

Defined benefit costs (including service cost, net interest and remeasurement) under the defined benefit retirement benefit plans are determined using the Projected Unit Credit Method. Service cost (including current service cost), and net interest on the net defined benefit liability (asset) are recognized as employee benefits expense in the period they occur. Remeasurement, comprising actuarial gains and losses and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

When the pension of the defined benefit plan has curtailment or settlement, the profit or loss of the curtailment or settlement will be recognized in current profit or loss.

(23)Share-based payment arrangements

The fair value at the grant date of the equity-settled share-based payments is expensed

on a straight-line basis over the vesting period, based on the Group’s best estimates of the number of shares or options that are expected to ultimately vest, with a corresponding increase in capital EARNINGS - employee share options. It is recognized as an expense in full at the grant date if vested immediately. The grant date of issued ordinary shares for cash which are reserved for employees and treasury shares transferred to employees is the date on which the number of shares that the employees have purchased is confirmed.

(24)Taxation

The tax expense for the period comprises current and deferred tax. Tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or items recognized directly in equity, in which cases the tax is recognized in other comprehensive income or equity.

A. Current tax

The current income tax is based on the taxed income of the said year. Since partial income and expense is taxable item or deductible of other years, or not attributing to taxable or deductible item in accordancewith related tax laws, it causes the taxable income to differ from the reported net profit in the consolidated income statement. The related liabilities of the current income tax are calculated by the legislated or substantially legislated tax rate at theend of the reporting period.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

Income tax on unappropriated earnings is expensed in the year the shareholders approved the appropriation of earnings which is the year subsequent to the year the earnings are generated.

B. Deferred tax

liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences, net operating loss carryforwards and unused tax credits to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be recovered. The deferred tax assets which originally not recognized is also reviewed at the end of each reporting period and recognized to the extent that it is probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the year in which the liability is settled or the asset is realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

5.CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION

AND UNCERTAINTY

In the application of the Company’s accounting policies, which are described in Note 4, the directors are required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the year in which the estimate is revised if the revision affects only that year, or in the year of the revision and future years if the revision affects both current and future years.

The following are the critical judgments, apart from those involving estimations, that the directors have made in the process of applying the Company’s accounting policies and that have the most significant effect on the amounts recognized in the parent company only financial statements.

1) Valuation of Inventory

Inventories are stated at the lower of cost or net realizable value, and the Company use judgment and estimate to determine the net realizable value of inventory at the end of each reporting period.

The Company estimates the net realizable value of inventory for obsolescence and unmarketable items at the end of reporting period and then writes down the cost of inventories to net realizable value. The net realizable value of the inventory is mainly determined based on assumptions of future demand within a specific time horizon.

2) Estimated impairment of accounts receivable

When there is objective evidence of impairment loss, the Company take into consideration the estimation of future cash flows. The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. Where the

actual future cash flows are less than expected, a material impairment loss may arise.

3) Impairment of non-financial Assets

During the process of asset impairment assessment, the Company shall rely on subjective judgment to determine the useful life of the independent cash flow assets and possible income and expense in the future for certain asset groups based on the operating model of assets and industrial characteristics. Any change in the estimation due to the changes of economic situation or the Company’s strategies may result in significant impairment in the future.

6. CASH AND CASH EQUIVALENTS

	December 31, 2020	December 31, 2020	December 31, 2019	December 31, 2019
Cash on hand	$	5,713	$	5,211
Demand deposits and checking accounts		1,845,009		1,299,816
Cash equivalent
Time deposits		2,121,635		1,166,763
Total	$	3,972,357	$	2,471,790
7.FINANCIAL ASSETS AND LIABILITIES AT	FAIR	VALUE THROUGH	PROFIT OR LOSS

(1)FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS-CURRENT

(2	December 31, 2020 December 31, 2019 Mandatorily measured at FVIPL Domestic listed shares $ 2,351,265 $ 103,198 )FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS-CURRENT December 31, 2020 December 31, 2019 Held for trading Derivative financial instruments— Interest rate swap contracts $ 99 $ 161 Forward foreign exchange contract — 320 Total $ 99 $ 481	December 31, 2020 December 31, 2019 Mandatorily measured at FVIPL Domestic listed shares $ 2,351,265 $ 103,198 )FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS-CURRENT December 31, 2020 December 31, 2019 Held for trading Derivative financial instruments— Interest rate swap contracts $ 99 $ 161 Forward foreign exchange contract — 320 Total $ 99 $ 481	December 31, 2019 $ 103,198
	Held for trading Derivative financial instruments— Interest rate swap contracts Forward foreign exchange contract Total	December 31, 2020 $ 99 — $ 99

A. The Company’s interest rate swap contracts unexpired are as follows:

December 31, 2020

		December 31, 2020
Contract amount (In Thousands) NTD 50,000 Contract amount (In Thousands) NTD 100,000	Maturity Date October 22,2021	Range of Interest Rates Paid Period of interest rate collection 1.46`％` Floating interest rate not less than 1.425`％` December 31, 2019 Range of Interest Rates Paid Period of interest rate collection 1.46`％` Floating interest rate not less than 1.425`％`
	Maturity Date October 22,2021	Range of Interest Rates Paid 1.46`％`

The Company signed the above interest rate swap with fixed payment and floating collection to hedge the risk of a rising loan rate.

B. The Company’s forward exchange contracts unexpired are as follows:

The company has no forward exchange transaction on December 31, 2020.

Buy forward foreign exchange	December 31, 2019	December 31, 2019
	Expiration period January 6, 2020 to January 17, 2020	Amount(thousand)
		EUR 2,000 / USD 2,234

The main purpose of the Company to engage in the forward exchange transactions

was to hedge the risks generated from exchange fluctuation of the foreign assets and liabilities.

8. NOTES AND ACCOUNTS RECEIVABLE,NET

Notes receivable Notes receivable from related parties Notes receivable, net Accounts receivable Less: Loss allowance Net Account receivable from related parties Accounts receivable, net Total	December 31, 2020 $ 441,325 2,760 $ 444,085 1,777,555 (28,572) 1,748,983 26,037 1,775,020 $ 2,219,105	December 31, 2019
		$ 209,306 2,667
		$ 211,973
		2,145,641 (28,199)
		2,117,442 32,378
		2,149,820
		$ 2,361,793

(1) The Company's export-oriented, the average credit period for customers is about 60 to

90 days. The credit period for domestic customers is longer, up to 180 days.

(2) Except for those impaird,the anging alalysis of the remailing notes and accounts receivable at the end of reporting period is as follows：

Non past due Past due Past due less than 30 days Past due 31-90 days Past due 91-180 days Past due 181-365 days Past due more than 1 year Total	December 31, 2020 $ 2,217,359 738 401 475 93 39 2,219,105	December 31, 2019
		$ 2,271,563 12,629 28,544 23,948 889 24,220
		2,361,793

The above aging schedule was based on the past due date.

(3) Movements of the allowance for doubtful accounts were as follows:

Balance, beginning of year Provision (Reversal) Amount written off Effect of exchange rate changes Balance, end of year	For the Year Ended December 31	For the Year Ended December 31
	2020 $ 28,199 546 (495) 322 $ 28,572	2019
		$ 10,190 18,961 (633) (319)
		$ 28,199

The Company estimated the impairment loss of the accounts receivable based on the allowance loss measured at the amount of the expected credit losses throughout the duration. For accounts receivable overdue more than 90 days, the Company shall focus on the operation status and solvency of the customer to individually assess the sign of impairment for the accounts receivable of the customer in the future duration and measure the allowance loss. For those overdue less than 90 days (including the undue ones), the Company will adjust the established loss ratio of the future forward-looking considerations as the reference for recognizing the

allowance loss of the accounts receivable based on the historical experience from the impairment loss of the accounts receivable actually occurred in the past and the economic forecast report of Taiwan Institute of Economic Research.

9. INVENTORIES

NVENTORIES
Manufacturing: Finished goods Work in process Raw materials Inventory in transit Subtotal Construction: Land inprogress Construction in progress Subtotal Total	December 31, 2020 $ 239,003 144,534 689,415 150,223 $ 1,223,175 $ 2,538,256 6,203,874 $ 8,742,130 $ 9,965,305	December 31, 2019
		$ 130,788 202,337 838,726 224,493
		$ 1,396,344
		$ 2,538,256 4,622,250
		$ 7,160,506
		$ 8,556,850

(1) The cost of inventories recognized as cost of sales for the years ended December 31, 2020 and 2019 were as follows:

2020 and 2019 were as follows:
		For the Year Ended December 31
		2020		2019
The cost of goods sold	$	7,360,765	$	9,049,991
Revenue from sales of scraps		(5,850)		(4,482)
Loss (gain) on physical inventory		(133)		3,595
Loss on (gain on reversal of) decline in market value		(71)		55
Loss on inventory retirement		10,027		4,536
Total	$	7,364,738	$	9,053,695

(2)The company’s construction project "The Global One" coordinated with the urban plan

to comprehensively review and revise the residential utilisation rate, and to apply for a construction license change, which was approved by the competent authority in March 2020.

(3)The Company signed the property trust contract with the Trust Department of Hua Nan

Bank for the construction project of “The Global One” and the duration is from August 30, 2019 to the date of acquiring the usage license and completing the first ownership registration for the building upon the completion of the construction.

(4)For the years ended December 31, 2020 and 2019, the interest capitalization amount of construction projects in progress was NT$88,549 thousand and NT$52,051 thousand, respectively, and the capitalization interest rate was 1.78% to 2.11% and 2.08% to 2.11%, respectively.

(5)Inventory pledge information detailed note 30.

10. OTHER CURRENT FINANCIAL ASSETS

Pledged time deposit Trust account Restricted deposit Total	December 31, 2020 $ 284 2,601,579 64,063 $ 2,665,926	December 31, 2019
		$ 300 3,670,741 77,690
		$ 3,748,731

The Company mortgaged or pledged, see Note 30.

11. OTHER CURRENT ASSETS,OTHERS

OTHER CURRENT ASSETS,OTHERS
Temporary payments Other current assets – other Payment on behalf of others Incremental costs of obtaining a contract Total	December 31, 2020 $ 15,024 1,083 — 722,885 $ 738,992	December 31, 2019
		$ 14,676 1,959 45 23,570
		$ 40,250

12. INVERTMENTS ACCOUNTED FOR USING EQUITY METHOD

The investment of associates by the Company listed in the following:

Name of Associate	Carrying Amount	Carrying Amount	% of Ownership and Voting Right Held bythe Company	% of Ownership and Voting Right Held bythe Company
	December 31		December 31
	2020	2019	2020	2019
NanGuan Rubber Tire Corp., Ltd. Nankang Yisheng Property Management Consultants Co., Ltd. Total	$ 814,000 1,998	$ 990,469 —	20.37`％` 40.00`％`	20.37`％` —
	$ 815,998	$ 990,469

The relevant information of significant associates is as follows:

NanGuan Rubber Tire Corp. Ltd. located its business place in Taiwan to run the sale of various tires. The financial information summarized in the following was prepared based

on the IFRSs financial report of NanGuan Rubber Tire Corp., Ltd.:

on the IFRSs financial report of NanGuan	Rubber Tire Corp., Ltd.:
Current assets Noncurrent assets Current liabilities Noncurrent liabilities Equity Non-controlling interests % of Ownership by the Company The Company enjoys rights and interests Unrealized profit form sales Amount of the investment book Operating revenues Net income (loss) Other comprehensive income Total comprehensive income Share of profit of associates accounted for using equity method	December 31, 2020 $ 6,417,435 7,624 (2,422,701) (2,011) $ 4,000,347 (3,185,471) $ 814,876 20.37`％` $ 814,876 (876) $ 814,000 For the Year Ended December 31, 2020 $ 152,049 (867,111) `－` (867,111) $ (176,632)	December 31, 2019
		$ 6,921,612 8,385 (2,060,344) (2,195)
		$ 4,867,458 (3,875,950)
		$ 991,508
		20.37`％` $ 991,508 (1,039)
		$ 990,469
		For the Year Ended December 31, 2019
		$ 129,563
		2,988,981 `－`
		2,988,981
		$ 608,860

13 PROPERTY, PLANT AND EQUIPMENT

Item		For the Year Ended	For the Year Ended	December 31, 2020	December 31, 2020	Balance, End of year $ 2,487,893 3,091,093 10,288,300
	Balance, Beginning of year	Additions	Disposals	Reclassificatio ns	Effect of Exchange Rate changes
Cost Land Buildings and structures Machinery and equipment	$ 2,487,893 3,005,470 10,184,268	$ `－` 67,245 324,109	$ `－` (4,858) (291,525)	$ `－` `－` `－`	$ `－` 23,236 71,448

Transportation equipment 149,631 8,524 (15,041) Other facilities 5,588,092 265,885 (65,467) Leasehold improvements 8,616 `－` `－` Construction in progress 485,250 643,513 `－` Total $ 21,909,220 $ 1,309,276 $ (376,891) Accumulated depreciation and impairment Buildings and structures $ 1,341,581 $ 88,739 $ (4,373) Machinery and equipment 8,120,894 318,488 (270,200) Transportation equipment 113,600 13,594 (13,462) Other facilities 4,041,300 345,304 (50,347) Leasehold improvements 8,616 `－` `－` Total $ 13,625,991 $ 766,125 $ (338,382) Net $ 8,283,229 For the Year Ended Item Balance, Beginning of year Additions Disposals Cost Land $ 2,487,893 $ `－`$ `－` Buildings and structures 2,717,911 347,410 `－` Machinery and equipment 10,313,617 455,279 (420,827) Transportation equipment 149,824 11,963 (9,918) Other facilities 5,401,646 392,509 (81,500) Leasehold improvements 8,616 `－` `－` Construction in progress 799,392 141,943 `－` Total $ 21,878,899 $ 1,349,104 $ (512,245) Accumulated depreciation and impairment Buildings and structures $ 1,283,132 $ 86,892 $ `－` Machinery and equipment 8,259,815 409,848 (412,288) Transportation equipment 112,834 11,883 (9,363) Other facilities 3,862,825 347,397 (73,211) Leasehold improvements 8,616 `－` `－` Total $ 13,527,222 $ 856,020 $ (494,862) Net $ 8,351,677	149,631 5,588,092 8,616 485,250	8,524 265,885 `－` 643,513	(15,041) (65,467) `－` `－`	`－` `－` `－` (545,331)	928 48,650 `－` 850	144,042 5,837,160 8,616 584,282
	$ 21,909,220	$ 1,309,276	$ (376,891)	$ (545,331)	$ 145,112	$ 22,441,386
			$ (4,373) (270,200) (13,462) (50,347) `－`	$ `－` `－` `－` `－` `－`	$ 11,413 58,881 695 38,242 `－`	$ 1,437,360 8,228,063 114,427 4,374,499 8,616
Buildings and structures Machinery and equipment Transportation equipment Other facilities Leasehold improvements Total Net Item	$ 1,341,581 8,120,894 113,600 4,041,300 8,616
	$ 13,625,991	$ 766,125	$ (338,382)	$ `－`	$ 109,231	$ 14,162,965
	$ 8,283,229					$ 8,278,421

	Balance, Beginning of year	Additions	Disposals	Reclassificatio ns	Effect of Exchange Rate changes	Balance, End of year
	$ 2,487,893 2,717,911 10,313,617 149,824 5,401,646 8,616 799,392	$ `－` 347,410 455,279 11,963 392,509 `－` 141,943	$ `－` `－` (420,827) (9,918) (81,500) `－` `－`	$ `－` `－` `－` `－` `－` `－` (450,914)	$ `－` (59,851) (163,801) (2,238) (124,563) `－` (5,171)	$ 2,487,893 3,005,470 10,184,268 149,631 5,588,092 8,616 485,250
	$ 21,878,899	$ 1,349,104	$ (512,245)	$ (450,914)	$ (355,624)	$ 21,909,220
			$ `－` (412,288) (9,363) (73,211) `－`	$ `－` `－` `－` `－` `－`	$ (28,4434) (136,481) (1,754) (95,711) `－`	$ 1,341,581 8,120,894 113,600 4,041,300 8,616
Buildings and structures Machinery and equipment Transportation equipment Other facilities Leasehold improvements Total Net	$ 1,283,132 8,259,815 112,834 3,862,825 8,616
	$ 13,527,222	$ 856,020	$ (494,862)	$ `－`	$ (262,389)	$ 13,625,991
	$ 8,351,677					$ 8,283,229

The Company mortgaged or pledged property, plant and equipment, see Note 30.

14. LEASE

(1) Right-of-use assets

) Right-of-use assets
Item		For the Year Ended December 31, 2020
	Balance, Beginning of year	Additions	Disposals	Effect of Exchange Rate changes	Balance, End of year
Cost Land Buildings and structures Transportation equipment Total Accumulated depreciation Land Buildings and structures Transportation equipment Total Net Item	$ 187,898 19,628 9,466	$ `－` 15,674 12,361	$ `－` (13,355) (1,981)	$ 2,945 `－` `－`	$ 190,843 21,947 19,846
	$ 216,992	$ 28,035	$ (15,336)	$ 2,945	$ 232,636
	$ 6,405 8,499 3,651	$ 6,386 9,499 5,583	$ `－` (13,355) (1,981)	$ 221 `－` `－`	$ 13,012 4,643 7,253
	$ 18,555	$ 21,468	$ (15,336)	$ 221	$ 24,908
	$ 198,437				$ 207,728

	Balance, Beginning of year	Additions	Disposals	Effect of Exchange Rate changes	Balance, End of year
Cost Land Buildings and structures Transportation equipment Total Accumulated depreciation Land Buildings and structures Transportation equipment Total Net	$ 195,675 14,283 7,803	$ `－` 5,345 1,663	$ `－` `－` `－`	$ (7,777) `－` `－`	$ 187,898 19,628 9,466
	$ 217,761	$ 7,008	$ `－`	$ (7,777)	$ 216,992
	$ `－` `－` `－`	$ 6,675 8,499 3,651	$ `－` `－` `－`	$ (270) `－` `－`	$ 6,405 8,499 3,651
	$ `－`	$ 18,825	$ `－`	$ (270)	$ 18,555
	$ 217,761				$ 198,437

(2) Lease liabilities

December 31, 2020 Lease liabilities-current $ 14,712 Lease liabilities-noncurrent 15,210 Total $ 29,922 Ranges of discount rate for lease liabilities :	December 31, 2019
	$ 11,898 4,156
	$ 16,054

For the Year Ended For the Year Ended December 31, 2020 December 31, 2019

Buildings and structures	1.0299`～`2,616`％`	1.1576`～`2,616`％`
Transportation equipment	1.0291`～`2,616`％`	1.1576`～`2,616`％`

(3) Other lease information

For the Year Ended December 31, 2020 Expenses relating to short-term leases $ 3,219 Expenses relating to low-value asset leases $ 243 Total cash outflow for leases $ 17,911 December 31, 2020 Short-term and low-value lease commitment amounts $ 2,533 INVESTMENT PROPERTY,NET December 31, 2020 Cost $ 332,287 Less : accumulated depreciation (941) Total $ 331,346 Fair value $ 337,809 For the Year Ended December 31, 2020 Cost Balance, Beginning of year $ 332,287 Additions `－` Balance, End of year 332,287 Accumulated depreciation and impairment Balance, Beginning of year 912 Depreciation 29 Balance, End of year 941 Net $ 331,346	For the Year Ended December 31, 2019 $ 4,050 $ 464 $ 17,904 December 31, 2019 $ 1,934 December 31, 2019
	$ 332,287 (912)
	$ 331,375
	$ 336,492
	For the Year Ended December 31, 2019
	$ 332,287 `－`
	332,287
	883 29
impairment Balance, Beginning of year Depreciation Balance, End of year Net
	912
	$ 331,375

15. INVESTMENT PROPERTY,NET

(1) The fair value of the land at 2th subsection of Hutian section in Beitou district was the

valuation result of the independent appraiser by adopting the comparison method for the valuation method; the fair value of other investment property was based on the

transaction price of sections nearby, which all classified as level 3 of the fair value.

(2) The rental income generated by investment real estate in 2020 and 2019 were NT$17

thousand, respectively.

16. SHORT-TERM BORROWINGS

SHORT-TERM BORROWINGS
Credit borrowings Secured borrowings Letter of credit borrowings Total Range of interest rate	December 31, 2020 $ 4,014,800 2,060,000 818,234 $ 6,893,034 0.45％～2.27％	December 31, 2019
		$ 3,280,000 3,230,000 907,622
		$ 7,417,622
		0.65％～5.00％

The Company mortgaged or pledged short-term borrowings, see Note 30.

17. SHORT-TERM NOTES AND BILLS PAYABLE

Commercial paper Less: discounts on bills payable Net Range of interest rate	December 31, 2020 $ 480,000 (387) $ 479,613 1.000％～1.098％	December 31, 2019
		$ 250,000 (292)
		$ 249,708
		1.068％～1.128％

(1) The guarantor accepting institution of the Company’s commercial paper payable were

all bills finance companies. The commercial paper payable was measured at the initial

per value since the impact of discounting was insignificant.

(2) The Company mortgaged or pledged short-term notes ans bills payable, see Note 30.

18. OTHER PAYABLES

OTHER PAYABLES
Salary and wages payable Interest payable Pension expense payable Other accrued expenses Machinery and Equipment payable Business tax payable Employee vacation payable Other payable Total PROVISIONS-CURRENT	December 31, 2020 $ 172,182 5,673 5,320 396,363 51,754 6,407 20,339 29,038 $ 687,076 December 31, 2020	December 31, 2019
		$ 167,667 8,982 5,444 339,320 129,132 9,343 18,869 2,356
		$ 681,113
		December 31, 2019

19. PROVISIONS- CURRENT

Finished product compensation loss

10,100

9,300

(1) The reserve to compensate the loss of finished products is to protect the goodwill of the Company and the rights of the consumer. When the tire purchased from the Company has damage which is proved to be the defect during the manufacturing process after the investigation, the Company is responsible for compensation depending on the extent of the damage. This compensation is identified as the cost of after-sale service. The reserve to compensate the loss of finished products is estimated by experience and offset upon the actual occurrence of maintenance.
(2) The above reserve was undiscounted due to the short term or insignificant discounting

impact.

20. LONG-TERM BORROWINGS

LONG-TERM BORROWINGS
December 31, 2020 Secured borrowings : Hua Nan Commercial Bank(A) $ 81,818 Hua Nan Commercial Bank(B) `－` Hua Nan Commercial Bank(C) `－` Cathay United Bank(D) 50,000 Bank of Taiwan(E) 178,030 Hua Nan Commercial Bank(F) 190,000 Hua Nan Commercial Bank(G) 300,000 Hua Nan Commercial Bank(H) 250,000 Hua Nan Commercial Bank and other of syndicated loan(I) 5,000,000 Less :Fee on syndicated bank loan (71,564) Less :Current portion (789,242) Long-term borrowings $ 5,189,042 Range of interest rate 0.94`％～`1.78`％`	December 31, 2020	December 31, 2019	Expiry Date
		$ 245,455 2,232,000 137,500 100,000 320,454 380,000 `－` `－` `－`	110.01.29 109.11.27 109.05.29 110.10.23 111.01.24 110.09.02 111.03.23 111.09.08 114.03.26
	(71,564) (789,242)	`－` (2,915,561)
	$ 5,189,042	$ 499,848
	0.94`％～`1.78`％`	1.25`％～`2.11`％`

(A) The loan period is six years, and the principal is amortized evenly in 12 installments.

(B) The loan period is 3 years, interest is paid monthly, and the principal is repaid at maturity. It has been repaid in advance in March, 2020.
(C) The loan period is two years, and the principal is amortized evenly in 4 installments.

(D) The loan period is 3 years, the principal is amortized quarterly in 12 installments, and the balance is paid off at the expiration date.
(E) The loan period is three years, and the principal is amortized evenly in 12 installments.
(F) The loan period is two years, and the principal is amortized evenly in 4 installments. (G) The loan period is two years, and the principal is amortized evenly in 4 installments.
(H) The loan period is two years, and the principal is amortized evenly in 4 installments.
(I)The construction project "The Global One" is a land urban renewal business. The project entered into a joint loan agreement with 14 financial institutions, including Hua Nan Bank, and provided the development land located in 4th Subsection Nankang Section of Nankang District in Taipei City as collateral for the joint loan. The total loan amount is $30 billion, and it is also agreed that Nankang Rubber Tire Corp., Ltd. shareholding in Nanzong Construction Developments, Co., Ltd. shall be maintained at 51% or more during the loan period, and that Nankang Rubber Tire Corp., Ltd. shall maintain operational control over Nanzong Construction Developments, Co., Ltd.. The loan amount of $5 billion was utilized in March 2020 to repay loans from existing financial institutions with a term of 5 years, with monthly interest payments and principal repayment on maturity.
(J)The Company mortgaged or pledged long-term borrowings notes ans bills payable, see Note 30.

21. RETIRED BENEFIT PLANS

(1) Defined contribution plans

The Nankang Company and Taipei nanhong Tire Co., Ltd adopted a pension plan according to the Labor Pension Act (the “LPA”), which is a defined contribution plan. Based on the LPA, the Corporation makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages. Accordingly the Company recognized expenses of NT$36,844 thousand and NT$31,277 thousand in the

consolidated statements of comprehensive income ended December 31, 2020 and 2019, respectively.

The Company’s mainland subsidiaries have a defined contribution plan Monthly contributions to an independent fund administered by the government in accordance with the pension regulations in the People’s Republic of China (PRC.) are based on certain percentage of employees’ monthly salaries and wages. Other than the monthly contributions, the Company has no further obligations. The pension costs under defined contribution pension plans of the Compeq Company for the years ended December 31,

2020 and 2019 were NT$24,930 thousand and NT$30,755 thousand, respectively.

(2) Defined benefit plans

A. The Nankang Company adopted the defined benefit plan under the Labor Standards

Law, under which pension benefits are calculated on the basis of the length of service and average monthly salaries of the six months before retirement. The company contributed amounts equal to 15% of total monthly salaries and wages to

a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name.

Before the end of each year, the Company assesses the balance in the pension fund.

If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Company is required to fund the difference in one appropriation that should be

made before the end of March of the next year. 。

The pension costs of the defined benefit plans recognized in profit or loss were as

follows:

For the Year Ended December 31
2020 2019

Current service cost $ 12,100 Net interest expense 1,062 Components of defined benefit costs recognized in profit or loss 13,162 Remeasurement on the net defined benefit liability: Return on plan assets (4,511) Actuarial loss arising from changes in financial assumptions 4,986 Actuarial loss (gain) arising from experience adjustments (6,183) Components of defined benefit cost recognized in other comprehensive income (5,708) Total $ 7,454	$ 12,309 1,488
	13,797
	(4,890) 3,553 (1,229)
	(2,566)
	$ 11,231

The pension costs of the aforementioned defined benefit plans were recognized in

profit or loss by the follows categories:

				For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
				2020		2019
Operating costs			$	9,676	$	10,205
Selling and	marketing expenses			588		631
General expenses	and	administrative		1,930		1,982
Research	and	development		968		979
expenses
Total			$	13,162	$	13,797

B. The amount arising from the defined benefit obligations of the Company in the

consolidated balance sheets were as follows:

December 31, 2020 Present value of defined benefit obligation $ 269,784 Fair value of plan assets 178,939 Net defined benefit liabilities $ 90,845	December 31, 2019
	$ 269,182 156,586
	$ 112,596

Movements in the present value of the defined benefit obligations were as follows:

For the Year Ended December 31

Balance, beginning of year	2020 $ 269,182	2019
		$ 272,492

Current service cost 12,100 Interest expense 2,768 Remeasurement: Actuarial loss arising from changes in financial assumptions 4,986 Actuarial loss (gain) arising form experience adjustment (6,183) Benefits paid from plan assets (13,069) Balance, end of year $ 269,784	12,309 3,250 3,553 (1,229) (21,193)
	$ 269,182

Movements in the fair value of the plan assets were as follows:

Balance, beginning of year Interest income Remeasurement: Return on plan assets Contributions from employer Benefits paid from plan assets Balance, end of year	For the Year Ended December 31	For the Year Ended December 31
	2020 $ 156,586 1,706 4,511 29,205 (13,069) $ 178,939	2019
		$ 140,541 1,762 4,890 30,586 (21,193)
		$ 156,586

The fund assets of the Company’s defined benefit pension plan are deposited to the specific account of the Trust Department of the Bank of Taiwan in the name of the Supervisory Committee for Labor Pension Reserve. The Pension Fund Supervisory Committee of the Council of Labor regularly monitors and reviews the investment portfolio of the assets and carefully establishes the investment portfolio and diverse outsourcing types, enhances the risk control and timely adjusts the investment strategies based on the changes in the market to improve the stable profit of the fund. The central competent authority with the collaboration of the Ministry of Finance commissioned the financial institution to manage the revenues, expenditures, safeguard and utilization of the plan assets. The minimum yield may not be less than the interest income generated from a local bank’s two-year time deposit; any deficits thereof shall be made up by the national treasury. The revenues,

expenditures, safeguard and utilization of the plan assets was established by the central competent authority, therefore the Company has no right to participate in the operation and management of such fund. For the fair value of the total assets under the fund on December 31, 2020 and 2019, please refer to the labor pension fund utilization report published by the government each year.

C. The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The principal assumptions of the actuarial valuation were as follows:

Discount rate Future salary rate increase	December 31, 2020 0.80`％` 2.75`％`	December 31, 2019
		1.10`％` 2.75`％`

If the principal actuarial assumptions adopted have changed, the affected amount of increase (decrease) in the present value of the defined benefit obligation is as follows:

Discount rate 0.25`％`increase 0. 25`％`decrease Future salary rate increase 1.00`％`increase 1. 00`％`decrease	December 31, 2020 $ (4,172) 4,339 18,148 (15,851)	December 31, 2019
		$ (4,423) 4,607 19,440 (16,891)

The sensitivity analysis above is the analysis of the impact due to a single assumption which has changed while other assumptions remained unchanged. In practice, many changes in assumptions may be interrelated. The aforementioned sensitivity analysis may not be able to reflect the actual change in the present value of the defined benefit obligation. The analysis of sensitivity adopted the same method used for calculation of net pension liabilities in the balance sheet.

D. The Company expects to make contributions of NT$32,000 thousand to the defined benefit plans in the next year starting from December 31, 2020. The weighted

average duration of the defined benefit obligation is 10.6 years.

22. EQUITY

(1) Capital stock

Capital stock
Numbers of shares authorized Shares issued par value Capital EARNINGS From convertible bonds From share of changes in equities of associates Total	December 31, 2020 $ 10,000,000 8,339,349 NTD 10 December 31, 2020 $ 18,505 465 $ 18,970	December 31, 2019
		$ 10,000,000 8,339,349 NTD 10
		December 31, 2019
		$ 18,505 465
		$ 18,970

(2) Capital EARNINGS

Under the Securities and Exchange Act, capital EARNINGS can only be used to offset a deficit when reserves are insufficient. However, the capital EARNINGS from share issued in excess of par (additional paid-in capital from issuance of common shares, conversion of bonds and treasury stock transactions) and donations may be capitalized, which however is limited to 10% of the Company’s paid-in capital and once a year. Capital EARNINGS shall be distributed by cash. Also, the capital EARNINGS from long-term investments may not be used for any purpose.

(3) Retained earnings and dividend policy

A.The amendment to the Articles of Incorporation of the Company was approved at the regular shareholders meeting on May 16, 2019 to specify that the EARNINGS earning distribution or loss off-setting proposal may be proposed at the close of each half fiscal year. If there are earnings at each half fiscal year, the Company shall estimate and preserve the payable taxes, cover loss carried forward, estimate preserved employee remuneration, appropriate 10% of the earnings as legal reserve and also make provision/reversal of special reserves pursuant to laws. The remaining balance shall be added to the undistributed earnings carried from half fiscal year as the shareholder dividend. For the distribution of earnings proposed by the board of directors,

when distributing in cash, it shall be resolved by the board of directors; when distributed in issuing of new shares, the proposal shall be submitted to the shareholders meeting and distributed after the resolution of the meeting.

If there is net profit after tax after account settlement of the fiscal year, the Company shall cover loss carried forward (including the adjustment of the undistributed earnings) and allocate 10% of the remainder as legal reserve, unless the statutory reserve reaches the amount of total paid-in capital of the Company. Special reserve or retained earnings may be appropriated if necessary. If there is any remaining thereafter, the board of directors shall draft the proposal for the distribution of the remaining earnings with the accumulated earnings undistributed at the beginning (including the undistributed earnings adjusted). When distributing the remaining in issuing of new shares, it shall be distributed after the being submitted to the shareholders’ meeting for the approval; when distributing in cash, the Company authorizes the distribution after a resolution has been adopted by a majority vote at a meeting of the board of directors attended by two-thirds of the total number of directors; and submits a report to the shareholders’ meeting.

Pursuant to Article 241 of the Company Act, the company distribute its legal reserve and the capital reserve, in whole or in part, by issuing new shares or in cash in proportion to the original shareholding ratio of the shareholders, it shall be conducted based on the resolution of the previous paragraph.

For the distribution of earnings of the company, the stock dividend is between 70% to 100% and the cash dividend is between 0% to 30% in principle. The above ratio may be adjusted depending on the actual needs.

B.According to Company Law, the appropriation for legal capital reserve shall be made until the reserve equals the Company’s paid-in capital. The reserve may be used to offset a deficit, or be distributed as dividends in cash or stocks for the portion in excess of 25% of the paid-in capital if the Company incurs no loss.
C.The allocation of special reserve and the distribution of the shareholders’ dividend and bonus is drafted by the board of directors and submitted to the shareholders’ meeting for resolution and adoption. If the stock dividend in the preceding paragraph shows no profit or the profit is not enough, the principal

shall not be used as the dividend.

D.When distributing the earnings regulations pursuant to existing , The NANKANG Company is required to set aside additional special reserve equivalent to the net debit balance of the other components of shareholders’ equity items (including exchange differences on translating foreign operations, unrealized gain [loss] on available-for-sale financial assets, and the gain or loss on the hedging instrument relating to the effective portion of a cash flow hedge). For any subsequent reversal of other net deductions from shareholders’ equity, the amount reversed may be distributed.
E.When first applying the IFRSs pursuant to the regulations of No.1010012865 issued by FSC, the company chose to adopt the exemption in IFRS 1 to re-stated the retained earnings and appropriate the same amount as the special reserve. When relative assets are used, disposed or reclassified, the original rate to state the special reserves shall be used to reverse the allocation of earnings. The balance of the special reserve remained unchanged in 2020 and 2019.
F.The proposal of 2020 interim earnings distribution approved by the board of directors

of NANKANG is stated as follows:

July 1 to December 31, 2020 Resolution date of the board of directors March 10, 2021 Legal reserve $ 40,307 Cash dividends to shareholders $ 481,349 Cash dividends per share(NT$) $ 0.60	January 1 to June 30, 2020
	August 11, 2020 $ 44,587 $ 280,787 $ 0.35

G.The proposal of 2019 interim earnings distribution approved by the board of directors of NANKANG is stated as follows:

July 1 to December 31, 2019 Resolution date of the board of directors February 25, 2020 Legal reserve $ 54,015 Cash dividends to shareholders $ 601,687 Cash dividends per share(NT$) $ 0.75	January 1 to June 30, 2019
	August 7, 2019 $ 59,758 $ 401,125 $ 0.50

H.The Company’s earning allocation for the year of 2018 , were approved in the

regular meeting of shareholders on May 16, 2019, The appropriations and dividends

per share were as follows:

Legal reserve Cash dividends to shareholders Cash dividends per share(NT$)	Appropriation of Earnings
	$ 17,496 $ 160,532 $ 0.1925

(4) Other equity

This refers to the exchange difference generated from the translating the net assets of foreign operations from its functional currency to the presentation currency of the Company (i.e. NTD). This is directly recognized as the Exchange difference in the financial statement translation of the foreign operation in the other comprehensive income.

23.Treasury shares

For the Year Ended December 31, 2020	For the Year Ended December 31, 2020	For the Year Ended December 31, 2020
Number of shares at January 1 (Thousand Shares) Increase in current period (Thousand Shares) Decrease in current period (Thousand Shares) 31,686 `－` `－` For the Year Ended December 31, 2019			Number of shares at December 31 (Thousand Shares)
			31,686

Number of shares at January 1 (Thousand Shares) 31,686	Increase in current period (Thousand Shares) `－`	Decrease in current period (Thousand Shares) `－`	Number of shares at December 31 (Thousand Shares)
			31,686

Under the Securities Exchange Act, the Corporation shall neither pledge treasury shares nor

exercise shareholder’s rights on these shares, such as rights to dividends and to vote.

24. OPERATING REVENUES

(1) Disaggregation of revenue from contracts with customers:

For the Year Ended December 31

By product

By product
Tire	2020 $ 9,695,119	2019
		$ 11,111,580

For the Year Ended December 31

By geography

By geography
	2020 $ 500,785 397,673 4,287,525 2,475,061 1,005,636 1,028,439 $ 9,695,119 December 31, 2019 $ 97,226 5,226,469 $ 5,323,695	2019
Taiwan China United States Europe Other regions in Asia Other Total Contract balances Contract liabilities-current Advance sales receipts Advance receipt of land payment Total		$ 467,950 423,400 4,750,033 2,885,479 1,130,639 1,454,079
		$ 11,111,580
		December 31, 2018
		$ 38,587 3,625,058
		$ 3,663,645

(2) Contract balances

Revenue recognized that was included in the contract liability balance at the beginning of the period :

of the period :
		For the Year Ended	December 31
		2020		2019
Balance of the contract liabilities at
the beginning recognized in the	$	27,755	$	41,892
revenue in current period
(3)Contract asset
	December 31, 2020		December 31, 2019
Current
Incremental costs of obtaining a contract	$	722,885	$	23,570

The additional cost of the contract refers to the cost generated from

acquiring the contract from the customer during the presale of the house. The additional cost of the contract is recognized at once when completing the performance obligation in the contract upon the completion of the actual building transfer and hand-over.

25. NON-OPERATING INCOME AND EXPENSES

(1) OTHER INCOME

For the Year Ended December 31

	For the Year Ended December 31	For the Year Ended December 31	d December 31
(2) (3)	2020 2019 Dividend income $ 9,033 $ 6,022 Compensation income 28,245 68,506 Rental income 2,648 `－` Others 55,139 `－` Total $ 95,065 $ 74,528 OTHER GAINS AND LOSSES For the Year Ended December 31 2020 2019 Gains on disposal of property, plant and equipment $ (7,747) $ (12,641) Loss on disposal of investments `－` (180) Foreign exchange gains (losses) (136,297) 22,381 Gains on financial assets (liabilities) at fair value through profit or loss 425,498 22,438 Loss from fire damage (26,813) `－` Miscellaneous disbursements (9,882) 7,422 Total $ 244,759 $ 39,420 FINANCE COSTS For the Year Ended December 31 2020 2019 Interest expense Bank loans $ 192,977 $ 194,368 Lease liabilities 305 350 Less: interest capitalized (94,053) (60,475) Total $ 99,229 $ 134,243	2020 2019 $ 9,033 $ 6,022 28,245 68,506 2,648 `－` 55,139 `－` $ 95,065 $ 74,528 For the Year Ended December 31	2019
			$ 6,022 68,506 `－` `－`
			$ 74,528
			2019
			$ (12,641) (180) 22,381 22,438 `－` 7,422
			$ 39,420
		2020 $ 192,977 305 (94,053) $ 99,229	2019
			$ 194,368 350 (60,475)
			$ 134,243

1.03 ％～ 2.11 ％ 1.14 ％～ 2.11 ％

Capitalization rates

26. INCOME TAX

(1) Income tax recognized in profit or loss
(A) Income tax expense consisted of the following:

For the Year Ended December 31

		2020		2019
Current income tax charge	$	242,924	$	234,702
Additional income tax on
unappropriated earnings		`－`		`－`
Income tax adjustments on prior years		8,116		13,175
Net changes on temporary
differences of deferred income		25,667		(48,358)
tax
Income tax expense recognized in profit or loss	$	276,707	$	199,519
A reconciliation of income before	income tax and income tax expense recognized
in profit or loss was as follows:
		For the Year Ended December 31
		2020		2019
Income before income tax	$	1,121,085	$	1,335,203
Tax calculated base on profit	$	273,741	$	310,670
before tax and statutory tax rate
Additional income tax on		`－`		`－`
undistributed earnings
Net investment income or loss		(19,886)		(162,235)
accounted for using equity
method
Net gain or loss on disposals of		(15,241)		`－`
investment
Dividend revenue		85,743		91,787
Valuation gain(loss) on financial		(69,858)		(4,552)
investments
Non-deductible expenses		(11,575)		(968)
Income tax adjustments on prior		8,116		13,175
years
Net changes on temporary		25,667		(48,358)
differences of deferred income
tax

(B) A reconciliation of income before income tax and income tax expense recognized in profit or loss was as follows:

Income tax expense recognized in $ 276,707 $ 199,519 profit or loss

As for other areas, the tax shall be calculated according to the rates applicable in

respective areas.

(2) Income tax expense (benefit) recognized in other comprehensive income

For the Year Ended December 31

2020 2019

Deferred tax expenses (income)

Current year

Current year
Remeasurement of defined benefit obligation	$	1,142	$	513
Income tax expense (benefit)
recognized in the components of	$	1,142	$	513
other comprehensive income

(3) Deferred income tax balance

The analysis of deferred income tax in the consolidated Balance Sheets was as follows:

	For the Year Ended December 31, 2020	For the Year Ended December 31, 2020	For the Year Ended December 31, 2020
Balance, Beginning ofyear	Recognized in Profit or Loss	Recognized in Other Comprehensive Income	Effect of Exchange Rate changes	Balance, End ofyear
	$ (3,208) (467) 160 (546)	$ (1,142) `－` `－` `－`	$ `－` `－` `－` `－`	$ 18,169 158 2,020 1,497
$ 27,047	$ (4,061)	$ (1,142)	$ `－`	$ 21,844
	$ (21,608) 2	$ `－` `－`	$ `－` `－`	$ (86,932) (2,453)
$ (67,779)	$ (21,606)	$ `－`	$ `－`	$ (89,385)
	$ `－`	$ `－`	$ `－`	$ (733,196)

	For the	Year Ended December	31, 2019
		Recognized in
Balance,	Recognized	Other	Effect of
Beginning	in Profit	Comprehensive	Exchange Rate	Balance,
ofyear	or Loss	Income	changes	End ofyear

Temporary difference Pension $ 26,390 Deferred sale benefit 1,444 Finished product compensation loss preparation 1,680 Other 1,506 Deferred tax assets $ 31,020 Temporary difference Unrealized investment benefits $ (119,195) Foreign exchange net gain or loss foreign operations (402) Deferred tax liabilities $ (119,597) Deferred tax liabilities- land value increment tax$ (1,124,560)	$ (3,358) (819) 180 537	$ (513) `－` `－` `－`	$ `－` `－` `－` `－`	$ 22,519 625 1,860 2,043
$ 31,020	$ (3,460)	$ (513)	$ `－`	$ 27,047
	$ 53,871 (2,053)	$ `－` `－`	$ `－` `－`	$ (65,324) (2,455)
$ (119,597)	$ 51,818	$ `－`	$ `－`	$ (67,779)
	$ `－`	$ `－`	$ 391,364	$ (733,196)

(4) Items for which no deferred tax assets have been recognized

tems for which no deferred tax assets	have been recognized
Loss carryforwards	December 31, 2020 $ 8,323	December 31, 2019
		$ 8,824

(5) Information about unused loss carryforwards :

As of December 31, 2020, the details regarding the unused loss carryforwards of the subsidiary Nanzong Construction Developments, Co., Ltd. are as follows:

Balance of unused loss carryforwards $ 1,607 10,414 11,630 11,984 1,034 1,476 972 2,498 $ 41,615	Final deductible year
	2021 2022 2023 2024 2026 2027 2028 2029

(6)The information of unrecognized deferred income tax liabilities associated with investments

As of December 31 in 2020 and 2019, the taxes of the taxable temporary differences regarding the unrecognized deferred tax liabilities related to the investment of the subsidiaries were NT$462,310 thousand and NT$505,751 thousand, respectively.

(7)Income tax examination

In the consolidated financial report, the authorization of the income tax reported by the consolidated entity’s profit-seeking enterprises in the territory of Republic of China is as follows:

Authorization of income tax reported by the profit-seeking enterprise Nankang Rubber Tire Corp.,Ltd. Authorized until 2018 Taipei NanHung Rubber Tire Corp. Ltd. Authorized until 2018 Nanzong Construction Developments, Authorized until 2018 Co., Ltd.

27. EARNINGS PER SHARE

(1) Basic earnings per share

Basic earnings per share
Net income for the period attributable to owners of the Corporation Weighted-average number of ordinary shares for basic earnings per share(in thousand shares) Basic EPS(NT$)	For the Year Ended December 31
	2020 $ 844,378 802,249 $ 1.05	2019
		$ 1,135,684
		802,249
		$ 1.42

(2) Diluted earnings pre share

Diluted earnings pre share
			For the Year Ended December 31
			2020		2019
Net income for the period attributable to owners of the Corporation		$	844,378	$	1,135,684
Weighted-average number of ordinary
shares for basic earnings	per		802,249		802,249
share(in thousand shares)
Assumed conversion of all dilutive
potential ordinary shares
Employees’ remuneration (in thousand shares)			25		27
Weighted-average number	of
common stocks after dilution	(in		802,274		802,276
thousand shares)
Diluted EPS(NT$)		$	1.05	$	1.42

THE PERSONNEL, DEPRECIATION AND AMORTIZATION EXPENSES OF THE

COMPANY

For the Year Ended December 31, 2020

For the Year Ended December 31, 2019

Personnel expenses Payroll expense Insurance expense Pension Others Depreciation Amortization	Classified as operating cost	Classified as operating expenses	Total	Classified as operating cost	Classified as operating expenses	Total
	$ 1,345,867 1,153,242 76,344 56,019 60,262 729,617 `－`	$ 374,106 317,235 23,282 19,298 14,291 57,976 422	$ 1,719,973 1,470,477 99,626 75,317 74,553 787,593 422	$ 1,410,472 1,201,155 82,956 61,612 64,749 820,571 `－`	$ 356,619 306,395 22,629 15,818 11,777 54,273 363	$ 1,767,091 1,507,550 105,585 77,430 76,526 874,844 363

(1) According to the Articles of Incorporation of NANKANG, if there is profit after annual closing (the profit before tax deducting the remunerations for employees), the Company shall allocate 0.1%~1% thereof as the remuneration to employees. The distribution is resolved by the board of directors and reported to the shareholders’ meeting. However, if the Company has accumulated losses, priority shall be given to covering accumulated losses before allocating the remuneration for the employee and its balance shall be allocated on a pro rata basis as referred to in the preceding paragraph.
(2) The employee remunerations estimated by NANKANG were NT$1,063 thousand and NT$1,276 thousand in 2020 and 2019 respectively. Shall there be any change to the annual consolidated financial report after the reporting date, the accounting treatment shall be applied, and the adjustment is accounted for in the next year.
(3) NANKANG resolved at shareholders’ meeting to distribute the 2019 employee remuneration in cash of NT$1,276 thousand on May 13, 2020, which had no difference with the estimated amount in 2019.
(4) The information about the appropriations of the Company’s profit sharing bonus to employees and compensation to directors is available at the Market Observation Post System website.

29. RELATED PARTY TRANSACTIONS

Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed as follows：

(1) Related party name and category

Related Party Name Related Party Category NanGuan Rubber Tire Corp., Ltd. Associates

Zhikai Development Co., Ltd. Top 10 shareholders of the parent company Top 10 shareholders of the parent Yuanre Development Co., Ltd. company Top 10 shareholders of the parent Yuanhung Development Co., Ltd. company

(2) Significant transactions with the related party

A. Revenue

evenue
		For the Year Ended December 31
		2020		2019
NanGuan Rubber Tire Corp., Ltd.	$	113,904	$	108,542

The sale is made based on the price of the general suppliers.

B. Purchases

		For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020		2019
NanGuan Rubber Tire Corp., Ltd.	$	1,136	$	1,425

The transaction price and payment terms have no difference with those of

the non-related party.

C. Notes receivable

otes receivable
		December 31
		2020		2019
NanGuan Rubber Tire Corp., Ltd.	$	2,760	$	2,667
Accounts receivable
		December 31
		2020		2019
NanGuan Rubber Tire Corp., Ltd.	$	26,037	$	32,378

D. Accounts receivable

E. Other receivables

	December	31
2020			2019

NanGuan Rubber Tire Corp., Ltd. $ `－` Range of interest rate 1.55`％`	$ 120,000
	1.55`％～`1.65`％`

The interest revenues received were NT$824 thousand and NT$1,925

thousand in 2020 and 2019, respectively.

F. Contract liability

ontract liability
Zhikai Development Co., Ltd. Yuanre Development Co., Ltd. Yuanhung Development Co., Ltd. Total	December 31
	2020 $ 291,417 148,084 134,234 $ 573,735	2019
		$ 194,255 98,709 89,483
		$ 382,447

The presale houses of the “The Global One” construction project sold by

the Company to Zhikai, Yuanrui, and Yuanhong were 11, 9 and 8

households as of December 31, 2020, respectively. The total amount of the sale contracts signed were NT$1,970,240 thousand, NT$1,000,950

thousand and NT$907,310 thousand respectively. The Company received 15% amount as the signing up based on the contract.

G. Unrealized profit from sales

Unrealized profit from sales
		For the Year Ended December 31
		2020		2019
NanGuan Rubber Tire Corp., Ltd.	$	876	$	1,039

H. Endorsement/guarantee

The information on the endorsement/guarantees made for others is as follows:

follows:
Zhikai Development Co., Ltd. Yuanre Development Co., Ltd. Total	December 31
	2020 $ 33,350 16,650 $ 50,000	2019
		$ 33,350 16,650
		$ 50,000

(3) Rewards to key management

The compensation to directors and other key management personnel were as follows:

For the Year Ended December 31

Short-term employee benefits Post-employment benefits Total	2020 $ 21,385 511 $ 21,896	2019
		$ 21,332 452
		$ 21,784

30. PLEDGED ASSETS

30 . PLEDGED ASSETS

31 Carrying Amount
Items
Purpose
December 31,
2020
December 31,
2019
Other current financial
assets
Letter of credit margin
and Short-term borrowing
$ 64,347 $ 77,990
Other current financial
assets
Trust account for property
development
2,601,579
3,670,741
Property, plant and
equipment
Short-term and long-term
borrowing、Short-term
notes and bills payable
3,360,516
3,376,898
Land to be built
Short-term and long-term
borrowing
2,538,256
2,538,256
Total
$ 8,564,698 $ 9,663,885
.SIGNIFICANT
CONTINGENT
LIABILITIES
AND
UNRECOGNIZED
COMMITMENTS

(1) Significant commitments

A. The balance of the Company’s LC amounts `：`

December 31, 2020 US$ (thousand) $ 15,765 JP`￥`(thousand) 33,500 -payment amount for contracted equipment`：` December 31, 2020 NT$(thousand) $ 399,627 CNY(thousand) 1,399	December 31, 2019
	$ 15,294 64,409 December 31, 2019
	$ 330,292 3,048

B. Non-payment amount for contracted equipment ：

C. The proceeds of the presale house contract signed with the customers by the Company are as follows:

Amount of signed contracts Received amount from contracts	December 31, 2020 $ 23,021,520 $ 5,095,093	December 31, 2019
		$ 11,366,030
		$ 3,670,135

Outstanding checks received $ 207,122 $ 7,460 from presale cases

D. The total contract price of the construction work signed with the contractors by the

Company is as follows:

ompany is as follows:
December 31, 2020 Amount of signed contracts $ 14,557,200 Amount paid based on the contract $ 1,223,240	December 31, 2019
	$ 14,557,200
	$ 18,280

32. SUBSEQUENT LOSSES: None.

33. SUBSEQUENT EVENTS: None.

34. CAPITAL MANAGEMENT

The Company plans its working capital (including R&D expenses and debt liquidation, etc.) required for the future in accordance with the characteristics currently existing in its industry and its future development status while it also considers the changes in the external environment, so as to ensure its sustainable operations. In so doing, the Company will be able to concurrently protect the interests of its shareholders and other related parties, maintain the optimal capital structure, and elevate the stockholder value. As a whole, the Company adopts a prudent risk management strategy.

In order to maintain or adjust the capital structure, the Company may adjust the dividend amount of the shareholders, issue new shares or repurchase the shares of the Company.

35. FINANCIAL INSTRUMENTS

(1) Categories of financial instruments

Categories of financial instruments
Financial assets Financial assets at amortized cost Financial assets at fair value through profit or loss Total Financial liabilities Financial assets at amortized cost Financial liabilities at fair value through profit or loss Total	December 31,2020 $ 8,963,300 2,351,265 $ 11,314,565 $ 14,606,219 99 $ 14,606,318	December 31,2019
		$ 8,811,043 103,198
		$ 8,914,241
		$ 12,106,734 481
		$ 12,107,215

A.The balance include financial assets at amortized cost, which comprise cash and cash

equivalents, notes receivale, accounts receivable, other receivables and refundable

deposits.

B. The balances include financial liabilities at amortized cost, which comprise short-

term and long-term borrowings, short-term notes and bills payable, notes payable,

accounts and other payables, and guarantee deposits.

(2) Fair value information
A. Fair value of financial instruments carried at amortized cost

The book value of the financial assets and liabilities measured at amortized cost by

the Company is close to the reasonable amount of the fair value.

B. The different levels that the inputs to valuation techniques are used to measure fair

value of financial instruments have been defined as follows ：

(A) Level 1 fair value measurements are those derived from quoted prices

(unadjusted) in active markets for identical assets or liabilities;

(B) Level 2 fair value measurements are those derived from inputs other than quoted

prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

(C) Level 3 fair value measurements are those derived from valuation techniques
that include inputs for the asset or liability that are not based on observable

market data (unobservable inputs).

C. Concerning the financial instruments measured by fair values, the basic

classification analysis of the Company in accordance with the nature, characteristics

and risk as well as fair value level of asset and liability shall be as follows:

(A) The following table presents the Company’s financial assets and liabilities

measured at fair value on a recurring basis:

	December 31, 2020	December 31, 2020
Level 1	Level 2	Level 3	Total
$2,349,958 `－`	$ `－` 1,307	$ `－` `－`	$2,349,958 1,307
$2,349,958	$ 1,307	$ `－`	$2,351,265
$ `－`	$ 99	$ `－`	$ 99

Level 1	Level 2	Level 3	Total
$ 101,949 `－`	$ `－` 1,249	$ `－` `－`	$ 101,949 1,249
$ 101,949	$ 1,249	$ `－`	$ 103,198
$ `－` `－`	$ 161 320	$ `－` `－`	$ 161 320
$ `－`	$ 481	$ `－`	$ 481

(B) The financial asset and liability measured by fair value on non-repeatable

foundation: none.

D. The methods and assumptions used by the Company to measure fair value is as

follows:

(A) The Company’s fair value inputs adopting the quoted market price are listed in

the following based on the characteristics of the instruments:

the following based on the characteristics	of the instruments:
Item Stock of listed (OTC) companies Stock of emerging companies	Market quoted
	Close price Average transaction price

(B) The forward exchange contract is often valuated based on the current forward

rate.

E. There was no transfer between fair value measurement level 1 and level 2 in 2020

and 2019.

(3) Financial risk management objectives

The currency risk, interest rate risk, credit risk and liquidity risk related to management and operation activities are the target of the Company’s financial risk management. The Company has devoted its efforts to recognizing, assessing and hedging market uncertainty in an attempt to reduce the potential adverse influence of market change on

the Company’s financial performance.

The Company’s major financial activities have all been re-checked by its board of directors in accordance with the related regulations and internal control system. During the financial plan execution period, the Company has to strictly follow the financial operation procedures related to overall financial risk management and accrual basis.

(4) Market risk

The Company is exposed to the market risks arising from changes in foreign exchange rates, interest rates and the prices in equity investments, and utilizes some derivative financial instruments to reduce the related risks.

A. Foreign currency risk

Most of the Company’s operating activities and investment in foreign are denominated in foreign currencies. Consequently, the Company is exposed to foreign currency risk. To protect against reductions in value and the volatility of future cash flows caused by changes in foreign exchange rates, the Company utilizes derivative shore-term borrowing and financial instruments, including currency forward contracts and cross currency swaps, to hedge its currency exposure. These instruments help to reduce, but do not eliminate, the impact of foreign currency exchange rate movements.

The Company’s purpose of the proceeds from short-term loans is to hedge naturally against the risk of the accounts receivable in USD. The accounts receivables of the Company is mainly in USD, therefore the utilization of short-term loans in USD can naturally hedge the risks of the accounts receivable in USD generated from the

changes in the foreign exchange rate.

The maturity of the derivative financial instruments engaged by the Company is all less than six months, which does not meet the terms for accounting hedge.

The net investment in the foreign operation was for strategic investment, therefore the Company did not adopt any hedging policy against it.

The sensitivity analysis of the exchange rate risk is calculated based on the net position of financial assets or liabilities in the monetary items in foreign currency held by the Company at the end of the financial reporting. If the relative change in NT dollar revaluation against each related currency is 1%, the amount of profit or loss of the Company will also increase or decrease accordingly and will become the negative of the same amount during devaluation.

Monetary items USD EUR GBP JPY CNY	December 31, 2020 $ (14,545) (4,929) (857) 44 `－`	December 31, 2019
		$ (6,390) (5,341) (1,309) (101) 67

B. Interest rate risk

Interest rate risk refers the risk caused by the change in the fair value of financial instruments as a result of change of the market interest rate. The interest rate risk of the company is mainly derived from variable interest rate borrowing.

Regarding the sensitivity analysis of the interest rate risk, the calculation is made according to the amount of the bank loan and the floating interest rate at the final day of the financial report period, and a quarter’s effect is assumed to be held. If the interest rate increased or decreased by 0.1%, the Company’s profit or loss as of December 31, 2020 and December 31, 2019 would increase or decrease NT$3,218 thousand and NT$2,708 thousand respectively.

C. Other price risk

The price risk of the Company’s equity instruments is mainly due to the investment classified as the financial assets measured compulsorily at fair value through profit or loss. All significant investment in the equity instruments shall be implemented after the approval of the Company’s board of directors.

For the sensitivity analysis on the price risk of the equity instruments, the calculation basis is the changes in the fair value at the end of the financial reporting. If the price of the equity instruments increased/decreased in 5%, the profit or loss of the Company would increase/decrease NT$117,563 thousand and NT$5,159 thousand in December 31, 2020 and 2019, respectively.

(5) Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company is exposed to credit risk from operating activities, primarily trade receivables, and from financing activities, primarily deposits, fixed-income investments and other financial instruments with banks. Credit risk is managed separately for business related and financial related exposures.

A. Business related credit risk

In order to maintain its quality of accounts receivable, the Company has set up its operation related credit risk management procedure.

The individual customer risk assessment covers the factors of an individual customer’s financial status and credit rating agency’s ratings, the Company’s internal credit ratings and historical transaction records and current economic status, etc. which may affect customer’s solvency capacity.

Because the customer in China has a longer credit period, the major counterparty in China is required to provide collateral or other secured rights to effectively reduce the credit risk of the Company. The management assigned the dedicated team responsible for the determination of the credit lines, credit approval and other monitor procedures to ensure that proper actions had been taken for the recovery of overdue receivables. Besides, on the balance sheet date, the Company would

recheck on a case-by-case basis the amounts or the receivable accounts to assure that the appropriate allowance for impairment has been duly recognized for the nonreceivable accounts.

As of December 31, 2020 and 2019, the receivable balance of the customer with sale revenue reaching above 5% accounted for 48.81% and 45.48% of the Company’s receivable balance, respectively. The concentration of the credit risk for other accounts receivable was relatively not significant.

B. Financial credit risk

The credit risk of bank deposits, fixed income investments, and other financial instruments is measured and monitored by the Finance Department of the Company. Since the transaction counterparties and the contract performance parties of the Company are banks of excellent credit standing and financial institutions or corporate entities with investment level 2, there are no non-compliance issues; therefore, there is no significant credit risk.

(6) Liquidity risk management

The purpose of the Company’s management of liquidity risk is to maintain the cash and cash equivalents, high liquidity securities and enough bank financing facilities required for business operations, so as to ensure sufficiency of the Company’s financial flexibility.

The table below summarizes the maturity profile of the Company’s financial liabilities

based on contractual undiscounted payments, including principles and interests.

Less Than 1year Non-derivative financial liabilities Short-term borrowings and short-term notes and bills payable $ 7,372,647 Accounts payable 1,254,227 Long-term borrowings 789,242 Lease liabilities 15,567 Guarantee deposits `－`		December 31,2020	December 31,2020	December 31,2020
	Less Than 1year	1`～`2 year	2`～`3 year	More than 3years	Total
		$ `－` `－` 260,606 11,399 1,061	$ `－` `－` `－` 2,557 `－`	$ `－` `－` 4,928,436 861 `－`	$ 7,372,647 1,254,227 5,978,284 30,384 1,061

$ 9,431,683	$ 273,066	$ 2,557	$ 4,929,297	$14,636,603
	$ `－`	$ `－`	$ `－`	$ 99

Less Than 1year	1`～`2 year	2`～`3 year	More than 3years	Total
	$ `－` `－` 464,242 3,493 1,614	$ `－` `－` 35,606 714 `－`	$ `－` `－` `－` `－` `－`	$ 7,667,330 1,022,381 3,415,409 16,309 1,614
$11,617,374	$ 469,349	$ 36,320	$ `－`	$12,123,043
	$ 161 `－`	$ `－` `－`	$ `－` `－`	$ 161 320
$ 320	$ 161	$ `－`	$ `－`	$ 481

SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN

CURRENCIES

(1) The significant financial assets and liabilities denominated in foreign currencies were

as follows:

as follows:
		December 31,	2020
	Foreign currencies (In Thousands)	Exchange Rare	Carrying Amount (NTD in Thousands)
Financial assets
Monetary items
USD	90,686	28.48	$ 2,582,737
EUR	14,074	35.02	492,871
GBP	2,204	38.90	85,736
Financial liabilities
Monetary items
USD	39,613	28.48	1,128,178
		December 31,	2019
	Foreign currencies (In Thousands)	Exchange Rare	Carrying Amount (NTD in Thousands)
Financial assets

Monetary items
USD	52,029	29.98	$ 1,559,829
EUR	15,901	33.59	534,115
GBP	3,325	39.36	130,872
JPY	36,446	0.276	10,059
Financial liabilities
Monetary items
USD	30,714	29.98	920,806

The above information is based on the functional currency of each body other than the foreign currency summary expression.

(2)There are multiple foreign currency types used in the Company and the disclosure cannot be made based on each significant foreign currency, therefore the information about exchange gain or loss of each currency is disclosed by summarization. The Company’s net gain (loss) of foreign exchange (including the realized and unrealized) were NT$(136,297) thousand and NT$22,381 thousand in 2020 and 2019, respectively.

37. OTHERS

(1) Maturity analysis on asset liabilities

The assets and liabilities with respect to the construction business are classified as current or non-current with the operating cycle as the standard. The related amount recognized based on the amount anticipated to be recovered or reimbursed within a year and more than a year after the balance sheet date is as follows:

December 31, 2020

Within 1 year Assets Inventories $ `－` Other current financial assets 2,601,579 Incremental costs of obtaining a contract `－` Liabilities Contract liability `－`	Within 1 year	After 1 year	Total
		$ 8,742,130 `－` 722,885 5,226,469	$ 8,742,130 2,601,579 722,885 5,226,469

December 31, 2019

Within 1 year Assets Inventories $ `－` Other current financial assets 3,670,471 Incremental costs of obtaining a contract `－` Liabilities Contract liability `－`	Within 1 year	After 1 year	Total
		$ 7,160,506 `－` 23,570 3,625,058	$ 7,160,506 3,670,471 23,570 3,625,058

(2) Non-cash transactions: None.
(3) Due to the COVID-19 epidemic, although the company's turnover in 2020 has decreased

compared with the previous year, it has not yet had a significant impact on the company's business and finances, and there are no doubts about the ability to continue

operations, asset impairment, and financing risks.

38. ADDITIONAL DISCLOSURES

The following are additional disclosures for the Company and its affiliates as required by the R.O.C. Securities and Futures Bureau ：

(1) Financings provided: See Table 1 attached;
(2) Endorsement/guarantee provided: See Table 2 attached;
(3) Marketable securities held (excluding investments in subsidiaries and associates): See Table 3 attached;
(4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital: See Table 4 attached;
(5) Acquisition of individual real estate properties at costs of at least NT$300 million or 20% of the paid-in capital: None;
(6) Disposal of individual real estate properties at prices of at least NT$300 million or 20% of the paid-in capital: See Table 5 attached;
(7) Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid-in capital:See Table 6 attached;
(8) Receivables from related parties amounting to at least NT$100 million or 20% of the

paid-in capital: See Table 7 attached;

(9) Information about the derivative financial instruments transaction: See Notes 7;
(10)The business relationship between the parent and the subsidiaries and significant transactions between them: See Table 8 attached;
(11)Names, locations, and related information of investees over which The Company exercises significant influence: See Table 9 attached;
(12) Information on investment in mainland China ：
A.The name of the investee in mainland China, the main businesses and products, its issued capital,method of investment, information on inflow or outflow of capital, percentage of ownership, income(losses) of the investee, share of profits/losses of investee, ending balance, amount received as dividends from the investee, and the limitation on investee: See Table 10 attached.
B. Significant direct or indirect transactions with the investee, its prices and terms of payment, unrealized gain or loss, and other related information which is helpful to understand the impact of investment in mainland China on financial reports: See Table 10 attached.
(13) Information of major shareholder

List of all shareholders with ownership of 5 percent or greater showing the names and the number of shares and percentage of ownership held by each shareholder: See Table 11 attached.

TABLE 1

FINANCINGS PROVIDED

(Amounts in Thousands of New Taiwan Dollars)

No. (Note 1)	Financing Company	Counter-party	Financial Statement Account	Related Party	Maximum Balance for the Period	Ending Balance (Note 6)	Amount Actually Drawn	Interest Rate	Nature for Financing (Note 4)	Transaction Amounts	Reason for Financing	Allowance for Bad Debt	Colla	teral	Financing Limits for Each Borrowing Company (Note 2)	Financing Company’s Total Financing Amount Limits (Note 3)
													Item	Value
0	NANKANG RUBBER TIRE CORP., LTD.	NANGUAN RUBBER TIRE CO., LTD.	Current assets─other receivables	Yes	$ 120,000	$`－`	$`－`	1.55%	1	$ 112,236	`－`	$`－`	`－`	`－`	$ 1,078,731	$ 4,314,923
0	NANKANG RUBBER TIRE CORP., LTD.	NANZONG CONSTRUCTION DEVELOPMENTS, CO., LTD.	Current assets─other receivables	Yes	490,000	`－`	`－`	`－`	2	`－`	Operating capital	`－`	`－`	`－`	3,236,192	4,314,923
1	NANKANG INTERNATION AL CO.,LTD.	NANKANG RUBBER TIRE CORP., LTD.	Short-term debt	Yes	756,250	712,000 (Note 7)	569,600 (Note 7.8)	`－`	2	`－`	Operating capital	`－`	`－`	`－`	4,850,470 (Note 5)	4,850,470 (Note 5)

Note 1 ： The Company and its subsidiaries are coded as follows:

1.The Company is coded “0”.
2.The subsidiaries are coded consecutively beginning from “1” in the order presented in the table above.
Note 2 ： The Company’s loaning of funds toward a single enterprise is limited to 10% of the Company’ s net value in the most recent financial statement; the limit of loan to the subsidiaries shall not exceed 30% of the Company’s net value in the most recent financial statement.
Note 3 ： The total loaning of funds is limited to 40% of the Company’s net value in the most recent financial statement. The loaning of funds between the foreign companies with 100% voting shares held by the Company directly and indirectly due to the required short-term financing, its amount is not subject to 40% of the net value.

Note 4 ： Nature of loans:.Business transaction: 1, Short-term financing: 2.

Note 5 ： The fund loaning of Nankang International Co.Ltd to the parent company is limited to 100% of the net value of Nankang International Co.Ltd. in the most recent financial statement.

Note 6 ： The balance at the end was the amount approved by the board of directors.

Note 7 ： The balance at the end was USD25,000 thousand; the actual amount disbursed was USD20,000 thousand.

Note 8 ： The related parties have been eliminated upon consolidation.

TABLE 2

ENDORSEMENTS/GUARANTEES PROVIDED

(Amounts in Thousands of New Taiwan Dollars)

No. (Note 1)	Endorsement / Guarantee Provider	Guaranteed Party	Guaranteed Party	Limits on Endorsement / Guarantee Amount Provided to Each Guaranteed Party (Note 3)	Maximum Balance for the Period	Ending Balance	Amount Actually Draw	Amount of Endorsement /Guarantee Collateralized by Properties	Ratio of Accumulated Endorsement / Guarantee to Net Equity per Latest Financial Statements	Maximum Endorsement / Guarantee Amount Allowable (Note 3)	Guarantee Provided by Parent Company	Guarantee Provided by A Subsidiary	Guarantee Provided to Subsidiaries in Mainland China
		Name	Nature of Relationship (Note 2)
0	NANKANG RUBBER TIRE CORP., LTD.	NANKANG (ZHANGJIAGANG FREE TRADE ZONE) RUBBER INDUSTRY CO.,LTD.	3	$ 5,393,654	$ 85,250	$`－`	$`－`	$`－`	0.00`％`	$ 10,787,307	`Ｙ`		`Ｙ`
0	NANKANG RUBBER TIRE CORP.,LTD.	NANKANG INTERNATIONAL CO.,LTD.	2	5,393,654	664,950	664,950	591,000	591,000	5.48`％`	10,787,307	`Ｙ`
0	NANKANG RUBBER TIRE CORP., LTD.	NANZONG CONSTRUCTION DEVELOPMENTS, CO., LTD.	2	5,393,654	450,000	450,000	450,000	450,000	4.17`％`	10,787,307	`Ｙ`
0	NANKANG RUBBER TIRE CORP.,LTD.	YUANRE DEVELOPMENTS, CO., LTD.	5	5,393,654	16,650	16,650	16,650	16,650	0.15`％`	10,787,307
0	NANKANG RUBBER TIRE CORP.,LTD.	ZHIKAI DEVELOPMENTS, CO., LTD.	5	5,393,654	33,350	33,350	33,350	33,350	0.31`％`	10,787,307
1	NANZONG CONSTRUCTION DEVELOPMENTS ,CO.,LTD.	NANKANG RUBBER TIRE CORP., LTD.	4	13,023,805 (Note 5)	7,000,000	7,000,000	7,000,000	7,000,000	214.99`％`	13,023,805 (Note 5)		`Ｙ`

Note 1 ： The Company and its subsidiaries are coded as follows:

(1).The Company is coded “0”.
(2)The subsidiaries are coded consecutively beginning from ”1” in the order presented in the table above.
Note 2 ： According to the “Guidelines Governing the Preparation of Financial Reports by Securities Issuers” issued by the R.O.C. Securities and Futures Bureau, receiving parties should be disclosed as one of the following:
(1) A company with which it does business.

(2) A company in which the public company directly and indirectly holds more than 50% of the voting shares.

(3) A company that directly and indirectly holds more than 50 % of the voting shares in the public company.
(4) A company in which the public company holds, directly or indirectly, 90% or more of the voting shares.
(5) A company that fulfills its contractual obligations by providing mutual endorsements/guarantees for another company in the same industry or for joint builders for purposes of undertaking a construction project.
(6) A company that all capital contributing shareholders make endorsements/ guarantees for their jointly invested company in proportion to their shareholding percentages.
(7) Companies in the same industry provide among themselves joint and several security for a performance guarantee of a sales contract for pre-construction homes pursuant to the Consumer Protection Act for each other.
Note 3 ： The endorsements/guarantees amount of the Company toward a single enterprise is limited to 50% of the Company’ s net value in the most recent financial statement; the total amount of endorsement/guarantee made by the Company shall not exceed 100% of the net value in the most recent financial statement.

Note 4 ： The intercompany endorsement guarantee limits for the Company's direct and indirect ownership of 100% of the voting shares are as follows ：

The endorsements/guarantees amount of the Company toward a single enterprise is limited to 50% of the Company’ s net value in the most recent financial statement.The Company shall not be limited to 50% of the Company's net worth if the Company directly or indirectly holds more than 50% of the voting rights to endorse the Company's guarantee.The total amount of guarantees that the Company and its subsidiaries as a whole may endorse externally is limited to no more than 150% of the Company's most recent net financial statements.

Note 5 ： The guarantees of Nanzong Construction Developments, Co., Ltd. toward its parent company is limited to 4 times of the net value in the most recent financial statement of Nanzong Construction Developments, Co., Ltd.

TABLE 3

MARKETABLE SECURITIES HELD

(Amounts in Thousands of New Taiwan Dollars)

Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account		December 31, 2020	December 31, 2020		Note
				Number of Shares	Carrying Value	Percentage of Ownership	Fair Value
NANKANG RUBBER TIRE CORP., LTD.	Stock MILDEF CRETE INC. TAIWAN TELEVISION ENTERPRISE, LTD. TAIWAN FERTILIZER CO., LTD. FEDERAL CORP. SHIHLIN PAPER CORPORATION	`－` `－` `－` `－` `－`	Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss	2,150,829 172,048 6,679,000 93,688,000 588,000	$ 107,434 1,307 362,002 1,845,654 34,868	3.665`％` 0.0613`％` 0.6815`％` 19.793`％` 0.226`％`	$ 107,434 1,307 362,002 1,845,654 34,868

Note ： Excluding subsidiaries,associates and joint ventures.

TABLE 4

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL

(Amounts in Thousands of New Taiwan Dollars)

Company Name	Marketable Securities Type and Name	Financial Statement Account	Counterparty	Nature of Relationship	Beginning Balance	Beginning Balance	Acquisition	Acquisition		Disposal	Disposal		Ending Balance	Ending Balance
					Shares	Amount	Shares	Amount (Note 1)	Shares	Amount	Carrying Value	Gain/Loss on Dispoal (Note 2)	Shares	Amount
NANKANG RUBBER TIRE CORP., LTD.	Stork/ FEDERAL CORP.	Financial assets at fair value through profit or loss- current	Centralized securities exchange market	`－`	`－`	$`－`	93,688,000	$ 1,845,654	`－`	`－`	`－`	`－`	93,688,000	$ 1,845,654
NANKANG RUBBER TIRE CORP., LTD.	Stock/ TAIWAN FERTILIZER CO., LTD.	Financial assets at fair value through profit or loss- current	Centralized securities exchange market	`－`	`－`	$`－`	12,192,000	$ 616,246	5,513,000	$ 254,244	$ 254,244	`－`	6,679,000	$ 362,002

Note 1 ： Calculated at fair value.

Note 2 ： Code of general ledger account is "financial assets at fair value through profit or loss". Due to adoption of IFRS, it would be valued at fair value rather than recognised disposal gain or loss.

TABLE 5

DISPOSAL OF INDIVIDUAL REAL ESTATE AT PRICES OF AT LEAST NT$300 MILLION OR 20%OF THE PAIK-IN CAPITAL

(Amounts in Thousands of New Taiwan Dollars)

Name of company	Type of property	Transaction date	Acquisition Date (Note 1)	Carrying Amount (Note 1)	Transaction amount	Amount actually receivable (Note 2)	Gain/Loss on Dispoal (Note 1)	Counterparty	Nature of Relationship	Purpose of Disposal	Price Reference
NANZONG CONSTRUCTION DEVELOPMENTS, CO., LTD.	Inventories	January 18, 2020	N/A	N/A	$ 312,680	$ 31,270	N/A	A Company	None	Get business benefits	Real estate valuation report
NANZONG CONSTRUCTION DEVELOPMENTS, CO., LTD.	Inventories	January 2020 to February 2020	N/A	N/A	369,900	36,990	N/A	B Company	None	Get business benefits	Real estate valuation report
NANZONG CONSTRUCTION DEVELOPMENTS, CO., LTD.	Inventories	November 24, 2020	N/A	N/A	327,200	9,610	N/A	C Company	None	Get business benefits	Real estate valuation report

Note 1 ： Inventory sold thus not applicable.

Note 2 ： These are advance on building and land received based on the contract.

TABLE 6

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

(Amounts in Thousands of New Taiwan Dollars and Foreign currencies in Thousands)

Company Name	Related Party	Nature of Relationships		Transaction Details	Transaction Details		Details of non-arm’s length transaction	Details of non-arm’s length transaction	Notes and Accounts receivable (payable)	Notes and Accounts receivable (payable)	Note
			Purchases/ Sales	Amount	Percentage of total purchases (sales)	Payment Terms	Unit Price	Payment Terms	Ending Balance	Percentage of total receivables (payable)
NANKANG RUBBER TIRE CORP., LTD.	TAIPEI NANHUNG RUBBER TIRE CORP., LTD.	Subsidiary	Sales	$ 290,361	4.67`％`	6 months	`－`	`－`	$ 65,634	5.96`％`	1
NANKANG RUBBER TIRE CORP., LTD.	NANGUAN RUBBER TIRE CORP., LTD.	Associates	Sales	112,236	1.80`％`	6 months	`－`	`－`	28,797	2.61`％`
NANKANG RUBBER TIRE CORP., LTD.	NANKANG (ZHANGJIAGANG FREE TRADE ZONE) RUBBER INDUSTRY CO., LTD	Indirect subsidiary	Purchases	243,748	7.72`％`	6 months	`－`	`－`	140,042	40.08`％`	1
NANKANG INTERNATIONAL CO.,LTD	NANKANG (ZHANGJIAGANG FREE TRADE ZONE) RUBBER INDUSTRY CO., LTD	Subsidiary	Purchases	USD 79,881	100`％`	6 months	`－`	`－`	USD 47,319	100.00`％`	1

Note1 ： The related parties have been eliminated upon consolidation.

TABLE 7

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

(Amounts in Thousands of New Taiwan Dollars and Foreign currencies in Thousands)

Company Name	Related Party	Nature of Relationships	Ending Balance	Turnover rate	Overdue receivables	Overdue receivables	Amounts Received in Subsequent Period	Allowance for Bad Debts	Note
					Amount	Action Taken
NANKANG (ZHANGJIAGANG FREE TRADE ZONE) RUBBER INDUSTRY CO., LTD	NANKANG INTERNATIONAL CO.,LTD	Parent company	USD 47,319	`－`	$ `－`	`－`	USD 17,972	$`－`	1
NANKANG (ZHANGJIAGANG FREE TRADE ZONE) RUBBER INDUSTRY CO., LTD	NANKANG RUBBER TIRE CORP.,LTD	The ultimate parent of the Company	USD 4,917	`－`	`－`	`－`	USD 217	`－`	1

Note1 ： The related parties have been eliminated upon consolidation.

TABLE 8

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS

FOR THE YEAR ENDED DECEMBER 31, 2020

(Amounts in Thousands of New Taiwan Dollars)

					(Amounts in Thousands of	(Amounts in Thousands of	New Taiwan Dollars)
No	Company Name	Counterparty	Nature of Relationship (Note 1)		IntercompanyTransactions
				Financial Statements Item	Amount (Note 2)	Terms	Percentage of Consolidated Net Revenue or Total Assets
0	NANKANG RUBBER TIRE CORP., LTD.	TAIPEI NANHUNG RUBBER TIRE CORP., LTD.	1	Net sales Accounts receivable	$ 290,361 62,567	Based on the agreed price of the buyer and seller Received based on the agreed terms of bothparties	3% `－`
		NANKANG (ZHANGJIAGANG FREE TRADE ZONE) RUBBER INDUSTRY CO., LTD.	1	Accounts payable Purchases Entrusted purchasing of materials	140,042 243,748 11,449	Received based on the agreed terms of both parties Based on the agreed price of the buyer and seller Based on the agreed price of the buyer and seller	`－` 3% `－`
		NANKANG INTERNATIONAL CO.,LTD.	1	Short-term debt	569,600	Loaning of funds from the subsidiaries	2%
		NANKANG TIRE NETHERLANDS B.V	1	Net sales	33,730	Based on the agreed price of the buyer and seller	`－`
1	NANKANG (ZHANGJIAGANG FREE TRADE ZONE) RUBBER INDUSTRY CO., LTD.	NANKANG INTERNATIONAL CO., LTD.	3	Net sales Accounts receivable	2,363,767 1,347,633	Based on the agreed price of the buyer and seller Received based on the agreed terms of bothparties	24% 4%

Note 1 ： 1. The holding company to subsidiary.

Subsidiary to holding company.
Subsidiary to subsidiary.

Note 2 ： Only transactions of NT$10,000 thousand or more are shown.

Note 3 ： The percentage with respect to the consolidated asset/liability for transactions of balance sheet items are based on each item’s balance at period-end. For profit or loss items, cumulative balances are used as basis.

TABLE 9

NAMES, LOCATIONS AND RELATED INFORMATION OF INVESTEES OVER WHICH THE COMPANY EXERCISES

SIGNIFICANT INFLUENCE

(Amounts in Thousands of New Taiwan Dollars and Foreign currencies in Thousands)

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	Balance a	s of December 31, 2020	s of December 31, 2020	Net Income (Losses) of the Investee	Shares of Profits/Losses of Investee	Notes
				December 31, 2020	December 31, 2019	Shares	Percentage of ownership	Carrying value
NANKANG RUBBER TIRE CORP.,LTD	TAIPEI NANHUNG RUBBER TIRE CORP., LTD. NANGUAN RUBBER TIRE CO., LTD. NANZONG CONSTRUCTION DEVELOPMENTS, CO., LTD. NANKANG RUBBER TIRE (SINGAPORE) PTE LTD. NANKANG INTERNATIONAL CO.,LTD. NANKANG TIRE NETHERLANDS B.V. NANKANG YISHENG PROPERTY MANAGEMENT CONSULTANTS CO., LTD.	Taiwan `〃` `〃` Singapore Seychelles Netherlands Taiwan	All kinds of tire transactions `〃` Professional asset management Reinvestment of other businesses and all kinds of tire transactions `〃` Information collection and all kinds of tire transactions Management Consulting	$ 42,000 5,500 3,358,784 USD 27,800 USD 80,780 EUR 60 2,000	$ 42,000 5,500 3,358,784 USD 27,800 USD 80,780 EUR 60 `－`	900,000 549,994 178,500,000 SG 45,982,196 US 80,780,000 EU 600 200,000	100.00 20.37 100.00 100.00 100.00 100.00 40.00	$ 32,091 814,000 3,255,951 1,461,884 4,849,869 39,499 1,998	$ 18,972 (867,111) 2,506 44,149 195,511 14,925 (5)	$ 18,972 (176,632) 2,506 44,149 195,511 14,925 (2)	1.4 4 2.4 2.4 4 3.4

Note 1 ： The amount of cash dividends acquired from Taipei Nanhung Rubber Tire Corp., Ltd. was NT$8,000 thousand.

Note 2 ： Nankang Rubber Tire Corp. Ltd. received cash dividends of NT$324,342 thousand and NT$104,375 thousand from Nankang (ZhangJiaGang Free Trade Zone) Rubber Industrial Co.Ltd. through 100% reinvestment in Nankang International Co.Ltd and Nankang Rubber Tire (Singapore) Pte. Ltd..

Note 3 ： Invested in the establishment of Nankang Yisheng Property Management Consulants Co., Ltd. and held 200,000 shares.

Note 4 ： The related parties have been eliminated upon consolidation.

TABLE 10

INFORMATION ON INVESTMENT IN MAINLAND CHINA

1.[(Amounts in Thousands of New Taiwan Dollars and Foreign currencies in Thousands)]

1.							(Amounts	in Thousands of Ne	w Taiwan Dol	lars and Foreign cu	rrencies in Thousa	nds)
Investee Company	Main Businesses and products	Total Amount of paid-in Capital	Method of Investment	Accumulated Outflow of Investment January 1, 2020	Investment Flows		Accumulated Outflow of Investment from Taiwan as of December 31, 2020	Net income (loss) of investee company	Percentage of Ownership	Shares of profits/Losses (Note 2)	Carrying Amount as of December 31, 2020	Accumulated Inward Remittance of Earnings as of December 31, 2020
					Outflow	Inflow
NANKANG (ZHANGJIAGA NG FREE TRADE ZONE) RUBBER INDUSTRY CO., LTD.	Production and sale of various tires	$ 4,089,158 US$ 143,580	Note1	$ 3,661,958 US$ 128,580	$`－`	$`－`	$ 3,661,958 US$ 128,580	$ 183,173 CNY 42,826	100`％`	$ 183,173 US$ 6,204	$ 6,041,491 US$ 212,131	$ 3,371,042 CNY 700,000

Accumulated	Investment in Mainland China as of December 31, 2020			Investment Amounts Authorized by Investment Commission, MOEA					Upper Limit on Investment
	$ 3,661,958 (US$ 128,580)			$ 4,089,158 (US$ 143,580)					$ 6,472,384

Note 1 ： Indirectly investment in Mainland China through the (Nankang International Co., Ltd. and Nankang Rubber Tire (Singapore) Pte. Ltd.) registered in a third region.

Note 2 ： The investment income (loss) recognized in current period adopted the financial statement certificated by the CPA of the parent company in Taiwan.

Note 3 ： The dividend amount remitted back by the third region companies Nankang International Co., Ltd. and Nankang Rubber Tire (Singapore) Pte. Ltd. 100% held by the Company were CNY$100,000 thousand on March 2020. As of December 31, 2020, the accumulated amount of the remittance was CNY$700,000 thousand.

Note 4 ： Initial investment amounts denominated in foreign currencies are translated into New Taiwan Dollars using the spot rates at the financial report date. (US$1:NT$28.48, US$1:NT$29.525, CNY$1:NT$4.377, CNY$1:NT$4.278)

2.

The Company invested resolution	Investment Amounts	Investment Amounts	Investment Amounts (US$ in Thousands)	Indirectly	Investment in Mainland China
	Approved Number	Authorized Amounts (US$ in Thousands)		Investment outflow (US$ in Thousands)	Purpose
NANKANG RUBBER TIRE (SINGAPORE) PTE LTD.	1997/08/21-(86)-86721648	US$ 27,800	US$ 27,800	US$ 27,800	Indirectly investment NANKANG (ZHANGJIAGANG FREE TRADE ZONE) RUBBER INDUSTRY CO., LTD.
NANKANG RUBBER TIRE (SINGAPORE) PTE LTD.	2007/12/26-0606370	US$ 6,950	US$ 6,950 (Note1)	`－`	Indirectly investment NANKANG (ZHANGJIAGANG FREE TRADE ZONE) RUBBER INDUSTRY CO., LTD.
NANKANG INTERNATIONAL CO., LTD.	2005/08/02-093039942	US$ 32,200	US$ 32,200	US$ 32,200	Indirectly investment NANKANG (ZHANGJIAGANG FREE TRADE ZONE) RUBBER INDUSTRY CO., LTD.
NANKANG INTERNATIONAL CO., LTD.	2007/12/26-09600460370	US$ 8,050	US$ 8,050 (Note1)	`－`	Indirectly investment NANKANG (ZHANGJIAGANG FREE TRADE ZONE) RUBBER INDUSTRY CO., LTD.
NANKANG INTERNATIONAL CO., LTD.	2008/02/20-09600472310	US$ 15,000	US$ 15,000	US$ 15,000	Indirectly investment NANKANG (ZHANGJIAGANG FREE TRADE ZONE) RUBBER INDUSTRY CO., LTD.
NANKANG INTERNATIONAL CO., LTD.	2008/12/02-09700377990	US$ 53,580	US$ 53,580 (Note 2)	US$ 53,580 (Note 2)	Indirectly investment NANKANG (ZHANGJIAGANG FREE TRADE ZONE) RUBBER INDUSTRY CO., LTD.

Note 1 ： The capital stock was the total dividends of US$15,000 thousand distributed as of September 2007 by the invested company in China, Nankang (ZhangJiaGang Free Trade Zone) Rubber Industrial Co., Ltd..

Note 2 ： The claim of the invested company in the third regions, Nankang International Co., Ltd. was converted into capital increase.

Major transactions between the invested companies in the Mainland China and the Company occurring directly or indirectly: Table 2, 6, 7, and 8.

TABLE 11

INFORMATION ON MAJOR SHAREHOLDERS

Name of major shareholders	Total Shares Owned (In Thousands)	Ownership Percentage
NanGuan Rubber Tire Corp. Ltd.	151,228	18.13`％`
Yuanre Development Co., Ltd.	82,088	9.84`％`
Yuanhung Development Co., Ltd.	82,764	9.92`％`
Zhikai Development Co., Ltd	82,383	9.87`％`

Note 1：The major shareholders information was from the data that the Company issued common shares (including treasury shares) and preference shares in dematerialised form which were registered and held by the shareholders above 5% on the last operating date of each quarter and was calculated by Taiwan Depository & Clearing Corporation.

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

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

For the information of reported share equity of insider, please refer to Market Observation Post System.

42. SEGMENT INFORMATION

(1) Operating segments

The Company uses the income from operations as the measurement for segment profit and the basis of performance assessment. The reportable segment is classified based on products and regions.There was no material differences between the accounting policies of the operating segment and the accounting policies described in Note 4.

(2) Segment revenue and operating results

The Company’s segment revenue and operating results as follows:

Items		For the Year Ended	For the Year Ended	December 31, 2020	December 31, 2020
	Taiwan	China	Construction Department	Other	Adjustment and Elimination	Total
Net revenue from external customers Net revenue from sales among intersegments Net operating income Share of profit (loss) of associates and joint ventures accounted for using equity method, net Tax expense Items	$ 6,273,560 38,978 626,879 (176,634) (222,131)					$ 9,695,119 `－` 1,029,090 (176,634) (276,707)
	Taiwan	China	Construction Department	Other	Adjustment and Elimination	Total
Net revenue from external Net revenue from sales among intersegments Net operating income Share of profit (loss) of associates and joint ventures accounted for using equity method, net Tax expense	$ 6,855,018 39,877 469,121 608,860 (141,566)	$ 4,197,445 239,718 240,958 `－` (56,718)	$ `－` `－` (4,802) `－` `－`	$ 59,117 `－` 9,428 `－` (1,235)	$ `－` (279,595) `－` `－` `－`	$11,111,580 `－` 714,705 608,860 (199,519)

(3) Products information

Products information
By products Tire	For the Year Ended December 31
	2020 $ 9,695,119	2019
		$ 11,111,580

(4) Geographical information

The Company’s revenue from operations from external customers by location of operations and information on its non-current assets by location of assets are shown below. The Company categorized the net revenue based on the country in which the customer is headquartered. Non-current assets include property, plant and equipment, investment property, intangible assets and other noncurrent assets. Excluded financial instruments and deferred tax assets.

instruments and deferred tax assets.	ferred tax assets.	ferred tax assets.
Net Revenue from External Customers For the Year Ended December 31 2020 2019 Taiwan $ 500,785 $ 467,950 China 397,673 423,400 America 4,287,525 4,750,033 Europe 2,475,061 2,885,479 Other regions in Asia 1,005,636 1,130,639 Others 1,028,439 1,454,079 Total $ 9,695,119 $ 11,111,580	Net Revenue from External Customers		Non-current Assets
	For the Year Ended December 31		December 31, 2020	December 31, 2019
	2020	2019
		$ 467,950 423,400 4,750,033 2,885,479 1,130,639 1,454,079	$ 6,397,822 2,315,930 `－` 752 `－` `－`	$ 6,490,693 2,457,480 `－` 1,746 `－` `－`
	$ 9,695,119	$ 11,111,580	$ 8,714,504	$ 8,949,919

(5) Major Customers information

Major customers representing at least 10% of net revenue ：

For the Year Ended December 31

Customer	2020		2019
	Amount	%	Amount	%
Customer A Customer B	$ 2,196,120 1,697,320	23 18	$ 2,500,525 1,740,502	23 16

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

[NANKANG RUBBER TIRE CORP., LTD. ]

PARENT COMPANY ONLY FINANCIAL STATEMENTS

AND INDEPENDENT AUDITORS' REPORT

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Address ： Suite 608, No.136, Sec.3, Jen Ai Rd., Taipei City, Taiwan (R.O.C.)

Phone ： (886-2) 2707-1000

INDEPENDENT AUDITORS' REPORT

NO.00031090EA

To the Board of Directors of Nankang Rubber Tire Corp., Ltd.

Opinion

We have audited the accompanying parent company only financial statements of Nankang Rubber Tire Corp., Ltd. (collectively referred to as “the Company”), which comprise the parent company only balance sheets as of December 31, 2020 and 2019, the parent company only statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2020 and 2019, and the notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the parent company only financial position of the Company as of December 31, 2020 and 2019, and its parent company only financial performance and its parent company only cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (“IFRSs”), International Accounting Standards (“IASs”), interpretations as well as related guidance endorsed by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Parent Company only Financial Statements section of our report. We are independent of the Company in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most

significance in our audit of the parent company only financial statements for the year ended December 31, 2020. These matters were addressed in the context of our audit of the parent company only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters for the Company’s parent company only financial statements for the year ended December 31,2020 are explained as follows:

Inventory valuation

The inventory amount of the Company’s as of December 31, 2020 was NT$719,569 thousand. Regarding the accounting policies for the inventory, please refer to Note 4(10) to the Parent Company Only Financial Report.

The inventory valuation of the Company’s is measured at the cost and net realizable value, whichever is lower. However, the valuation of the inventory’s net realizable value is relevant to the major judgments and estimates and the profitability of the tire industry is directly influenced by the price fluctuation of the main material, the natural rubber. Also, the international price fluctuation of the material has the uncertain factors due to the external economic environment. Thus, we believe that the inventory valuation of the Company shall be listed as one of the most important matters for audit in this year.

The corresponding audit process we perform mainly for the above key audit matters is as follows:

1.Confirm that the purchase of the Company all undergo the procedure of inquiry, parity and price negotiation by testing the control points related to the internal control of the purchase.
2.Assess the reasonableness regarding the inventory valuation and the allowance policy for inventory devaluation and obsolescence loss of the Company.
3.Confirm the reasonableness of the net realizable value by the random checking and calculating the inventory valuation of the Company based on the information.
4.Confirm the completeness of the allowance for inventory devaluation and obsolescence loss by assessing the inventory conditions of the annual inventory and aging inventory analysis.

Impairment of property, plant and equipment

The property, plant and equipment of the Company as of December 31, 2020 was NT$5,963,161 thousand. Regarding the accounting policies for the impairment of the non-financial assets, please refer to Note 4(15) to the Parent Company Only Financial Report.

The management of the Company regularly assesses whether the property, plant and equipment has any sign of impairment. Given the recoverable amount of each cash-generating unit measured during the impairment assessment involves many assumptions and estimates, the estimation method may have direct impact on and change the result of the recoverable amount measurement. Thus, we believe that the impairment assessment for the property, plant and equipment of the Company shall be listed as one of the most important matters for audit in this year.

The corresponding audit process we perform mainly for the above key audit matters is as follows:

1.Understand, analyze and assess the reasonableness regarding the cashgenerating unit identified by the management of the Company which has no sign of impairment.
2.Assess and analyze the assumptive data of the impairment test, including the cash flow forecast and discount rate, to confirm the appropriateness of each assumptive data.

Responsibilities of Management and Those Charged with Governance for the Parent company only Financial Statements

Management is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs, IASs, interpretations as well as related guidance endorsed by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of parent company only financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the parent company only financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless

management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, (including members of the Audit Committee), are responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Parent company only Financial Statements

Our objectives are to obtain reasonable assurance about whether the parent company only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these parent company only financial statements.

Identify and assess the risks of material misstatement of the parent company only financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of

accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the parent company only financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company only financial statements for the year ended December 31, 2020 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Baker Tilly Clock & Co Ying-Lai Chou , CPA Kuo-Fu Tseng, CPA March 10, 2021

Notes to Readers

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

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

NANKANG RUBBER TIRE CORP., LTD.

PARENT COMPANY ONLY BALANCE SHEETS

December 31, 2020 and 2019

(In Thousands of New Taiwan Dollars)

ASSETS	NOTES	December 31,2020	December 31,2020	December 31,2019	December 31,2019
		Amount	`％`	Amount	`％`
CURRENT ASSETS Cash and cash equivalents Financial assets at fair value through profit or loss-current Notes receivable from related parties,net Accounts receivable,net Accounts receivables from related parties,net Other receivables Other receivables from related parties Current tax assets Inventories Prepayments Other current financial assets Other current assets,others Total current assets NONCURRENT ASSETS Investments accounted for using equity method Property, plant and equipment Right-of-use assets Investment property,net Deferred tax assets Prepayments for business facilities Refundable deposits Other non-current assets Total noncurrent assets	6 7 8,27 8 8,27 27 9 10 11 12 13 24	$ 110,698 2,351,265 5,827 1,005,824 90,348 88,378 1,795 `－` 719,569 31,060 285 14,784	1 11 `－` 5 1 `－` `－` `－` 3 `－` `－` `－`	$ 121,661 103,198 5,460 1,263,634 128,825 73,804 123,846 17,508 740,533 28,753 300 14,978	1 `－` `－` 6 1 `－` 1 `－` 4 `－` `－` `－`
		4,419,833	21	2,622,500	13
		10,455,292 5,963,161 20,917 331,346 21,844 92,506 7,492 `－`	49 28 `－` 2 `－` `－` `－` `－`	10,703,728 6,008,333 7,636 331,375 27,047 106,058 24,629 72,962	54 30 `－` 2 `－` 1 `－` `－`
		16,892,558	79	17,281,768	87
TOTAL		$ 21,312,391	100	$ 19,904,268	100

The accompanying notes are an integral part of the parent company only financial statements.

NANKANG RUBBER TIRE CORP., LTD.

PARENT COMPANY ONLY BALANCE SHEETS

December 31, 2020 and 2019

(In Thousands of New Taiwan Dollars)

LIABILITIES AND EQUITY	NOTES	December 31,2020	December 31,2020	December 31,2019	December 31,2019
		Amount	`％`	Amount	`％`
CURRENT LIABILITIES Short-term borrowings Short-term notes and bills payable Fanancial liabilities at fair value through profit or loss-current Contract liability Notes payable Accounts payable Accounts payable to related parties Other payables Current tax liabilities Provisions-current Lease liabilities-current Current portion of long-term borrowings Other current liabilities,others Total current liabilities NONCURRENT LIABILITIES Long-term borrowings Deferred tax liabilities-land value increment tax Deferred tax liabilities-income tax Lease liabilities-noncurrent Net defined pension liabilities Other non-current liabilities Total noncurrent liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY Capital stock Capital EARNINGS Retained earnings Legal reserve Special reserve Unappropriated earnings Other equity Treasury shares Total equity	14 15 7 22 27 16 17 12 18 18 24 12 19 20(1) 20(2) 20(3) 20(4) 21	$ 7,062,212 479,613 99 55,039 18,531 190,808 140,042 369,126 250,568 10,100 9,327 789,242 58,300	33 2 `－` `－` `－` 1 1 2 1 `－` `－` 4 `－`	$ 6,062,559 249,708 161 18,530 14,718 136,665 122,261 373,287 138,245 9,300 6,036 683,561 59,408	30 1 `－` `－` `－` 1 1 2 1 `－` `－` 3 `－`
		9,433,007	44	7,874,439	39
		260,606 639,709 89,385 11,532 90,845 `－`	1 3 `－` `－` 1 `－`	499,849 639,709 67,779 645 112,596 360	3 3 `－` `－` 1 `－`
		1,092,077	5	1,320,938	7
		10,525,084	49	9,195,377	46
		8,339,349 18,970 3,196,579	39 `－` 15	8,339,349 18,970 3,230,109	42 `－` 16
		348,586 2,302,896 545,097	2 11 2	249,984 2,302,896 677,229	1 12 3
		175,638 (943,229)	1 (4)	63,692 (943,229)	`－` (4)
		10,787,307	51	10,708,891	54
TOTAL		$ 21,312,391	100	$ 19,904,268	100

The accompanying notes are an integral part of the parent company only financial statements.

NANKANG RUBBER TIRE CORP., LTD.

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED ON DECEMBER 31, 2020 AND 2019

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

DESCRIPTION	NOTE	2020	2020	2019	2019
		Amount	`％`	Amount	`％`
OPERATING REVENUES OPERATING COSTS GROSS PROFIT BEFORE UNREALIZED GROSS UNREALIZED PROFIT FROM SALES REALIZED PROFIT ON FROM SALES GROSS PROFITFROM OPERATIONS OPERATING EXPENSES Selling and marketing expenses General and administrative expenses Research and development expenses Expected credit impairment losses Total operating expenses INCOME FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Interest income Other income Other gains and losses Finance costs Share of profits of subsidiaries and associates Total non-operating income and expenses INCOME BEFORE INCOME TAX INCOME TAX EXPENSE NET INCOME OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss Remeasurement of defined benefit obligation Income tax benefit (expense) related to items that will not be reclassified subsequently Items that may be reclassified subsequently to profit or loss Exchange differences on translation of foreign operations Income tax relating to the components of other comprehensive income(loss) Other comprehensive (loss) income, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR EARNINGS PER SHARE Basic Diluted	22 9 23(1) 23(2) 23(3) 24 19 24 25	$ 6,218,316 (4,798,828)	100 (77)	$ 6,821,212 (5,512,322)	100 (81)
		1,419,488	23	1,308,890	19
		(7,485) 10,215	`－` `－`	(10,215) 7,531	`－` `－`
		1,422,218	23	1,306,206	19
		(398,862) (324,273) (94,446) (495)	(6) (5) (2) `－`	(442,029) (305,783) (110,711) `－`	(6) (4) (2) `－`
		(818,076)	(13)	(858,523)	(12)
		604,142	10	447,683	7
		926 74,342 376,496 (93,434) 99,429	`－` 1 6 (2) 2	2,176 74,528 51,341 (112,510) 811,175	`－` 1 1 (2) 12
		457,759	7	826,710	12
		1,061,901 (217,523)	17 (4)	1,274,393 (138,709)	19 (2)
		844,378	13	1,135,684	17
		5,708 (1,142) 111,946 `－`	`－` `－` 2 `－`	2,566 (513) (241,464) `－`	`－` `－` (4) `－`
		116,512	2	(239,411)	(4)
		$ 960,890	15	$ 896,273	13
		$ 1.05 $ 1.05		$ 1.42 $ 1.42

The accompanying notes are an integral part of the parent company only financial statements.

NANKANG RUBBER TIRE CORP., LTD.

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(In Thousands of New Taiwan Dollars)

DESCRIPTION	Capital Stock	Capital EARNINGS		Retained earnings		Other equity	Treasury shares	Total equity
			Legal reserve	Special reserve	Unappropriated earnings	Exchange differences on translation of foreign operations
BALANCE, JANUARY 1, 2019	$ 8,339,349	$ 18,970	$ 172,730	$ 2,302,896	$ 178,403	$ 305,156	$ (943,229)	$ 10,374,275
Appropriations of prior year’s earnings Legal reserve Cash dividends Net income in 2019 Other comprehensive income in 2019, net of income tax Total comprehensive income in 2019	`－` `－` `－` `－`	`－` `－` `－` `－`	77,254 `－` `－` `－`	`－` `－` `－` `－`	(77,254) (561,657) 1,135,684 2,053	`－` `－` `－` (241,464)	`－` `－` `－` `－`	`－` (561,657) 1,135,684 (239,411)
	`－`	`－`	`－`	`－`	1,137,737	(241,464)	`－`	896,273
BALANCE, DECEMBER 31, 2019	8,339,349	18,970	249,984	2,302,896	677,229	63,692	(943,229)	10,708,891
Appropriations of prior year’s earnings Legal reserve Cash dividends Net income in 2020 Other comprehensive income in 2020, net of income tax Total comprehensive income in 2020	`－` `－` `－` `－`	`－` `－` `－` `－`	98,602 `－` `－` `－`	`－` `－` `－` `－`	(98,602) (882,474) 844,378 4,566	`－` `－` `－` 111,946	`－` `－` `－` `－`	`－` (882,474) 844,378 116,512
	`－`	`－`	`－`	`－`	848,944	111,946	`－`	960,890
BALANCE, DECEMBER 31, 2020	$ 8,339,349	$ 18,970	$ 348,586	$ 2,302,896	$ 545,097	$ 175,638	$ (943,229)	$ 10,787,307

Note 1: The employee remunerations of the Company was NT$1,063 thousand and NT$1,276 thousand from January 1 to December 31 in 2020 and 2019 respectively, which has been separately deducted from the consolidated

statements of comprehensive income in each period.

The accompanying notes are an integral part of the parent company only financial statements.

NANKANG RUBBER TIRE CORP., LTD.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED ON DECEMBER 31, 2020 AND 2019

(In Thousands of New Taiwan Dollars)

DESCRIPTION	2020	2019
CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Income and expense (loss) items Depreciation expense Expected credit impairment losses Net gain on financial assets and liabilities at fair value through profit or loss Interest expense Interest income Dividend income Share of profit of subsidiaries and associates Loss on disposal of property, plant and equipment Loss on disposal of investments Unrealized profit from sales Realized profit on from sales Unrealized revenue form related parties Other adjustments to reconcile loss Changes in operating assets and liabilities Financial assets at fair value through profit or loss Notes receivable from related parties Accounts receivable Accounts receivables from related parties Other receivables Inventories Prepayments Other current assets Contract liability Notes payable Accounts payable Accounts payables to related parties Other payables Provisions Other current liabilities Accrued pension liabilities Cash generated from operations Interest received Interest paid Income taxes paid Net cashgenerated byoperatingactivities	$ 1,061,901 515,324 495 (425,498) 93,434 (926) (9,033) (99,429) 1,197 `－` 7,485 (10,215) (2,331) 26,813 `－` (367) 257,315 38,477 (14,674) 20,964 (2,307) 193 36,509 3,812 54,143 17,781 (1,930) 800 (1,107) (16,043)	$ 1,274,393 493,021 `－` (22,758) 112,510 (2,176) (6,022) (811,175) 2,668 180 10,215 (7,531) (4,095) `－` (9,068) 4,170 (247,131) (7,688) (27,265) (4,599) (2,802) 7,899 (10,090) 8,619 44,022 (25,873) 42,001 900 1,660 (16,789)
	1,552,783 1,026 (95,595) (62,026)	797,196 2,131 (115,458) (52,663)
	$ 1,396,188	$ 631,206

(Continued)

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NANKANG RUBBER TIRE CORP., LTD.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED ON DECEMBER 31, 2020 AND 2019

(In Thousands of New Taiwan Dollars)

DESCRIPTION	2020	2019
CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of financial assets at fair value through profit or loss Proceeds from disposal of financial assets at fair value through profit or loss Acquisition of investments accounted for under the equity method Capital reduction and refund from investmen acclunted for using equity method Dividends received from investment accounted for using equity method Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease (increase) in Refundable Deposits Decrease (increase) in other receivables due from related parties Decrease (increase) in other financial assets Decrease (increase) in other noncurrent assets-others Decrease (increase) in prepayments for business facilities Dividends received from other investment Net cash generated by (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in short-term borrowings Increase (decrease) in short-term notes and bills payable Increase in long-term borrowings Decrease in long-term borrowings Increase (decrease) in guarantee deposits received Repayment of the principal portion of lease liabilities Cash dividends Net cash generated by (used in) financing activities NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD CASH AND CASH EQUIVALENTS AT END OF THE PERIOD	$ (2,438,183) 615,552 (2,000) `－` 436,718 (492,702) 3,045 17,137 122,051 15 72,962 13,552 9,033	$ `－` `－` (800,000) 624,706 461,936 (554,865) 3,097 610 1,737,499 (300) `－` (65,502) 6,022
	(1,642,820)	1,413,203
	1,029,806 229,905 650,000 (783,560) (360) (7,669) (882,453)	(1,262,721) (64,914) 780,000 (857,622) (39) (8,304) (561,637)
	235,669	(1,975,237)
	(10,963) 121,661	69,172 52,489
	$ 110,698	$ 121,661

The accompanying notes are an integral part of the parent company only financial statements.

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NANKANG RUBBER TIRE CORP., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(Amounts in thousands of New Taiwan dollars, unless otherwise stated)

1. ORGANIZATION AND OPERATIONS

Nankang Rubber Tire Corp., Ltd. (the “Company”) was established in February 1959 and is mainly involved in the manufacturing and selling of tires and various rubber supplies. In November 1963, the stocks of the Company were approved by the Financial Supervisory Commission (FSC) for listing on the Taiwan Stock Exchange. The parent company only financial report is expressed in New Taiwan Dollars, the functional currency adopted by the Company.

2. APPROVAL OF FINANCIAL STATEMENTS

The parent company only financial statements were approved by the board of directors and authorized for issue on March 10, 2021.

3. APPLICATION OF NEW AND REVISED STANDARDS, AMENDMENTS AND INTERPRETATIONS

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

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

020 are as follows`：`
New, Revised or Amended Standards and Interpretations Amendments to IAS 1 and IAS 8, ‘Disclosure initiative- definition of material’ Amendments to IFRS 3, ‘Definition of a business’ Amendments to IFRS 9 and IAS 39 and IFRS 7, ‘Interest rate bechmark reform’ Amendment to IFRS 16, ‘Covid-19-related rent concessions’	Effective Date Issued byIASB
	January 1, 2020 January 1, 2020 January 1, 2020 June 1, 2020

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

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

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not yet adopted by the Group

not yet adopted by the Group
New, Revised or Amended Standards and Interpretations Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9” Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform -Phase 2”	Effective Date Issued by IASB
	January 1, 2021 January 1, 2021

The Company evaluated that the adoption of the aforementioned IFRSs would not have any material impact on the consolidated financial report.

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

IFRSs issued by IASB but not yet endorsed by the FSC

Effective Date Issued
by IASB

To be determined by IASB
January 1, 2022
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2022
January 1, 2022

The Company continues to assess the impact of the aforementioned standards and interpretations on the financial status and business result of the Company, and relevant impacts will be disclosed after the completion of the assessment.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Statement of compliance

The accompanying parent company only financial statements have been prepared in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (the “Accounting Standards Used in Preparation of the Parent Company Only Financial Statements”).

(2) Basis of Preparation

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The parent company only financial statements have been prepared on the historical cost basis except for financial instruments that are measured at fair value, and defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligation. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

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

(3) Foreign Currencies

In preparing the financial statements of each individual parent company only entity, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the closing rates. All exchange differences arising on the settlement of monetary items or on translating monetary items are taken to profit or loss in the period. Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising on the retranslation of non-monetary items are recognized in profit or loss for the year except for exchange difference arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income, in which case, the exchange differences are also recognized directly in other comprehensive income.

Non-monetary items that are measured at historical cost in a foreign currency are not retranslated.

For the purposes of presenting parent company only financial statements, the assets and liabilities of the Company’s foreign operations are translated into NT$ using exchange rates prevailing at the end of each reporting period. Income and expense items are

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translated at the average exchange rates for the period. Exchange differences arising, if any, are recognized in other comprehensive income.

(4) Current and Noncurrent Assets and Liabilities

Current assets held for trading purposes and expected to be sold or consumed within one year from the balance sheet date. Current liabilities are obligations incurred for trading purposes and to be settled within one year from the balance sheet date. Assets and liabilities that are not classified as current are noncurrent assets and liabilities, respectively.

(5) Cash equivalents

(6) Financial Instruments

Financial assets and financial liabilities are recognized when the Company become a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.

Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

(7) Financial assets

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A. Measurement category

Financial assets are classified into the following categories: financial assets at fair value through profit or loss (“FVTPL”) and financial assets at amortized cost.

a) Financial asset at FVTPL

b) Measured at amortized cost

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

Cash and cash equivalents, notes and accounts receivable, other receivables and refundable deposits are measured at amortized cost. Subsequent to initial recognition, financial assets measured at amortized cost are measured at amortized cost, which equals to carrying amount determined by the effective interest method less any impairment loss. Foreign exchange gains and losses are recognized in profit or loss.

Except for the two conditions below, the interest income is calculated by multiplying the effective interest rate by the total book value of the financial assets: 1) The interest income of the purchased or originated credit-impaired financial

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assets is calculated by multiplying the credit-adjusted effective interest rate by the cost of amortized financial assets.

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

B. Impairment of financial assets

At the end of each reporting period, a loss allowance for expected credit loss is recognized for financial assets at amortized cost.

The expected credit loss is calculated according to the average weighted credit loss in which the risk rated ratio of default occurrence is used in calculation. The 12month expected credit loss represents the credit loss expected to occur to the financial instruments within 12 months after their reporting day due to possible default. The expected credit loss in the duration period refers to the credit loss expected to occur to the financial instruments in the expected duration period due to possible default. The Company recognizes an impairment loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.

C. Derecognition of financial assets

The Company derecognize a financial asset only when the contractual rights to the

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cash flows from the asset expire, or when they transfer the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss.

(8) Financial liabilities &Equity instruments

A. Equity instruments

Equity instruments issued by a group entity are recognized at the proceeds received, net of direct issue costs.

B. Financial liabilities

Financial liabilities other than those held for trading purposes and designated as at FVTPL are subsequently measured at amortized cost at the end of each reporting period.

a) Derecognition of financial liabilities

b) Offsetting financial instruments

Financial assets and liabilities are offset and reported in the net amount in the

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balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.

(9) Derivative financial instruments

(10) Inventories

(11) Investments Accounted for Using Equity Method

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

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

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

The acquisition cost exceeding the amount of the share of the fair value of the subsidiary’s recognizable assets and liabilities received by the Company on its acquisition day is listed as goodwill. Such goodwill includes the investment’s book

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

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

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

B. An associate is an entity over which the Company has significant influence and that is neither a subsidiary nor a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.Under the equity method, investment in the affiliated companies is recognized at the costs initially in the consolidated balance sheet and is adjusted subsequently according to the changes in the Company’s shares of the invested company’s net assets. In the event that the Company’s shares of loss in the affiliated companies exceed its equity in the affiliated companies, the Company recognizes extra losses only in the event of occurrence of legal obligations, presumed obligations or within the scope that the Company made payment on behalf of the affiliated companies.

Any excess of the cost of acquisition over the Company’s share of the net fair value

of the identifiable assets, liabilities and contingent liabilities of an associate

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recognized at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment. Any excess of the Company’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss. When the Company transacts with an associate, profits and losses resulting from the transactions with the associate are recognized in the Company’s parent company only financial statements only to the extent of interests in the associate that are not owned by the Company.

(12) Investment properties

(13) Property, Plant, and Equipment

Property, plant and equipment are stated at cost, less subsequent accumulated depreciation and subsequent accumulated impairment loss.

These properties are depreciated and classified to the appropriate categories of property, plant and equipment when completed and ready for intended use.

Depreciation is computed by the straight-line method over the estimated useful lives. The estimated useful lives are as follows:

Buildings: 5-50 years; machinery and equipment: 8-12 years; transportation equipment:

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4-6 years; leasehold improvements:2 years;other equipment: 5-10 years.

Assets held under financial lease are depreciated within the useful years in the same manner as their own assets. Those with shorter lease terms are depreciated within the lease term.

Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.

(14) Leases

A. The Company as lessor

B. The Company as lessee

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

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Lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term or a change in future lease payments resulting from a change in expected paid amount under the residual value guarantee, a change in the assessment of an option to purchase an underlying assets, or a change in an index or a rate used determine to those payments, the Company remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. If the carrying amount of the right-of-use assets has been reduced to zero, the remaining amount will recognized in profit or loss.

(15) Impairment of Non-financial Assets

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its

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carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. An impairment loss is recognized in profit or loss.

(16) Provision

(17) Revenue Recognition

(18) Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are added to the cost of these assets, until the assets are substantially ready for their intended use or sale.

If a specific loan is used for temporary investment before being applied to the capital expenditure meeting required elements and therefore earns the investment income, it

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shall be deducted from the loan cost meeting the terms of capitalization.

All other borrowing costs are recognized in profit or loss in the period in which they are incurred.

(19) Employee Benefits

(20) Share-based payment arrangements

The fair value at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s best estimates of the number of shares or options that are expected to ultimately vest, with a corresponding increase in capital EARNINGS - employee share options. It is recognized as an expense

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in full at the grant date if vested immediately. The grant date of issued ordinary shares for cash which are reserved for employees and treasury shares transferred to employees is the date on which the number of shares that the employees have purchased is confirmed.

(21) Taxation

A. Current tax

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

Income tax on unappropriated earnings is expensed in the year the shareholders approved the appropriation of earnings which is the year subsequent to the year the earnings are generated.

B. Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the parent company only financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences, net operating loss carryforwards and unused tax credits to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated

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with investments in subsidiaries and associates, and interests in joint ventures, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the year in which the estimate is revised if the revision affects only that year, or in the year of the revision and future years if the revision affects both current and future years.

The following are the critical judgments, apart from those involving estimations, that the

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directors have made in the process of applying the Company’s accounting policies and that have the most significant effect on the amounts recognized in the parent company only financial statements.

1) Valuation of Inventory

Inventories are stated at the lower of cost or net realizable value, and the Company use judgment and estimate to determine the net realizable value of inventory at the end of each reporting period.

2) Estimated impairment of accounts receivable

3) Impairment of non-financial Assets

6. CASH AND CASH EQUIVALENTS

Cash on hand Demand deposits and checking accounts Total	December 31, 2020 $ 847 109,851 $ 110,698	December 31, 2019
		$ 1,233 120,428
		$ 121,661

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7. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT

OR LOSS

(1) FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS-CURRENT

December 31, 2020 December 31, 2019 Mandatorily measured at FVIPL Domestic listed shares $ 2,351,265 $ 103,198 FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS-CURRENT-CURRENTCURRENT December 31, 2020 December 31, 2019 Held for trading Derivative financial instruments - $ 99 $ 161 Interest rate swap contracts

(2) FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS-CURRENT-CURRENTCURRENT December 31, 2020 December 31, 2019

A. The Company’s interest rate swap contracts unexpired are as follows:

Contract amount (In Thousands)		December 31,	2020
	Maturity Date	Range of Interest Rates Paid	Period of interest rate collection
NTD 50,000 Contract amount (In Thousands)	October 22,2021	1.46`％` December 31,	Floating interest rate not less than 1.425`％` 2019
	Maturity Date	Range of Interest Rates Paid	Period of interest rate collection
NTD 100,000	October 22,2021	1.46`％`	Floating interest rate not less than 1.425`％`

The Company signed the above Interest rate swap contracts with fixed payment and floating collection to hedge the risk of a rising loan rate.

8. NOTES AND ACCOUNTS RECEIVABLE, NET

Notes receivable from related parties Notes receivable, net Accounts receivable Less: Loss allowance Net Account receivable from related parties	December 31, 2020 $ 5,827 $ 5,827 $ 1,006,611 (787) 1,005,824 90,348	December 31, 2019
		$ 5,460
		$ 5,460
		$ 1,264,421 (787)
		1,263,634 128,825

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Accounts receivable, net Total	$ 1,096,172 $ 1,392,459 $ 1,101,999 $ 1,397,919

(1) The Company's export-oriented, the average credit period for customers is about 60 to
90 days. The credit period for domestic customers is longer, up to 180 days.
(2) Except for those impaird,the anging alalysis of the remailing notes and accounts

receivable at the end of reporting period is as follows ：

Non past due Past due Past due less than 30 days Past due 31-90 days Past due 91-180 days Past due 181-365 days Past due more than 1 year Total	December 31, 2020 $ 1,101,260 738 `－` `－` `－` 1 $ 1,101,999	December 31, 2019
		$ 1,385,312 8,830 1,681 2,095 1 `－`
		$ 1,397,919

The above aging schedule was based on the past due date.

(3) Movements of the allowance for doubtful accounts were as follows:

Balance, beginning of year Provision Amount written off Balance, end of year	For the Year Ended December 31	For the Year Ended December 31
	2020 $ 787 495 (495) $ 787	2019
		$ 787 `－` `－`
		$ 787

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receivable actually occurred in the past and the economic forecast report of Taiwan Institute of Economic Research.

9. INVENTORIES

NVENTORIES
Finished goods Work in process Raw materials Inventory in transit Total	December 31, 2020 $ 156,706 85,113 367,017 110,733 $ 719,569	December 31, 2019
		$ 80,225 112,318 378,172 169,818
		$ 740,533

The cost of inventories recognized as cost of sales for the years ended December 31, 2020

and 2019 were as follows:

and 2019 were as follows:
The cost of goods sold Revenue from sales of scraps Loss on inventory retirement Loss(gain) on physical inventoies Total	For the Year Ended December 31
	2020 $ 4,793,097 (3,936) 10,027 (360) $ 4,798,828	2019
		$ 5,510,566 (2,178) 4,536 (602)
		$ 5,512,322

10. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

Name of investee	Carrying Amount	Carrying Amount	% of Ownership and Voting Right Held bythe Company	% of Ownership and Voting Right Held bythe Company
	December 31, 2020	December 31, 2019	December 31, 2020	December 31, 2019
Investments in subsidiaries: Taipei NanHung Rubber Tire Corp., Ltd. Nanzong Construction Developments, Co., Ltd. Nankang Rubber Tire (Singapore) Pte. Ltd. Nankang International Co., Ltd. Nankang Tire Netherlands B.V Subtotal Investments in associates NanGuan Rubber Tire Corp., Ltd. Nankang Yisheng Property Management Consultants Co., Ltd. Subtotal Total	$ 32,091 3,255,951 1,461,884 4,849,869 39,499	$ 19,198 3,253,445 1,498,224 4,920,361 22,031	100.00`％` 100.00`％` 100.00`％` 100.00`％` 100.00`％` 20.37`％` 40.00`％`	100.00`％` 100.00`％` 100.00`％` 100.00`％` 100.00`％` 20.37`％` `－`
	9,639,294	9,713,259
	814,000 1,998	990,469 `－`
	815,998	990,469
	$ 10,455,292	$ 10,703,728

(1) Details of the Company’s subsidiaries are provided in Note 4(3) of the

Company’s consolidated financial statements as of and for the year ended December 31,2020.

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(2) The relevant information of significant associates is as follows:

NanGuan Rubber Tire Corp. Ltd. located its business place in Taiwan to run the

sale of various tires.

The financial information summarized in the following was prepared based on

the IFRSs financial report of NanGuan Rubber Tire Corp., Ltd.:

the IFRSs financial report of NanGuan Rubber Tire Corp.,	Ltd.:
December 31, 2020 Current assets $ 6,417,435 Noncurrent assets 7,624 Current liabilities (2,422,701) Noncurrent liabilities (2,011) Equity 4,000,347 Non-controlling interests (3,185,471) $ 814,876 % of Ownership by the Company 20.37`％` The Company enjoys rights and interests $ 814,876 Unrealized profit form sales (876) Amount of the investment book $ 814,000 For the Year Ended December 31,2020 Operating revenus $ 152,049 Net income (loss) $ (867,111) Other comprehensive income `－` Total comprehensive income $ (867,111) Share of profit of associates accounted for using equity method $ (176,632)	December 31, 2019
	$ 6,921,612 8,385 (2,060,344) (2,195)
	4,867,458 (3,875,950)
	$ 991,508
	20.37`％` $ 991,508 (1,039)
	$ 990,469
	For the Year Ended December 31,2019
	$ 129,563
	$ 2,988,981 `－`
	$ 2,988,981
	$ 608,860

11. PROPERTY, PLANT AND EQUIPMENT

Item		For the Year Ended December 31,2020	For the Year Ended December 31,2020	For the Year Ended December 31,2020
	Balance, Beginning of year	Additions	Disposals	Reclassifications	Balance, End of year
Cost Land Buildings and structures Machinery and equipment Transportation equipment Other facilities Leasehold improvements Construction in progress Total Accumulated depreciation and impairment Buildings and structures Machinery and equipment	$ 2,487,892 1,559,329 6,087,152 88,594 2,576,194 8,617 360,654	$ `－` 32,547 166,168 6,338 131,966 `－` 498,513	$ `－` `－` (291,525) (12,798) (9,414) `－` `－`	$ `－` `－` `－` `－` `－` `－` (342,830)	$ 2,487,892 1,591,876 5,961,795 82,134 2,698,746 8,617 516,337
	$13,168,432	$ 835,532	$ (313,737)	$ (342,830)	$13,347,397
	$ 655,711 4,699,972	$ 49,119 259,483	$ `－` (270,200)	$ `－` `－`	$ 704,830 4,689,255

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Transportation equipment Other facilities Leasehold improvements Total Net Item	66,376 1,729,423 8,617	10,994 187,224 `－`	(11,296) (1,187) `－`	`－` `－` `－`	66,074 1,915,460 8,617
	$ 7,160,099	$ 506,820	$ (282,683)	$ `－`	$ 7,384,236
	$6,008333				$5,963,161

	Balance, Beginning of year	Additions	Disposals	Reclassifications	Balance, End of year
Cost Land Buildings and structures Machinery and equipment Transportation equipment Other facilities Leasehold improvements Construction in progress Total Accumulated depreciation	$ 2,487,892 1,227,626 6,085,043 87,085 2,381,745 8,617 751,303	$ `－` 331,703 402,705 6,797 204,310 `－` 548,765	$ `－` `－` (400,596) (5,288) (9,861) `－` `－`	$ `－` `－` `－` `－` `－` `－` (939,414)	$ 2,487,892 1,559,329 6,087,152 88,594 2,576,194 8,617 360,654
	$13,029,311	$1,494,280	$ (415,745)	$ (939,414)	$13,168,432
	$ 610,533 4,847,979 61,847 1,555,333 8,617	$ 45,178 247,039 9,747 183,806 `－`	$ `－` (395,046) (5,218) (9,716) `－`	$ `－` `－` `－` `－` `－`	$ 655,711 4,699,972 66,376 1,729,423 8,617
and impairment Buildings and structures Machinery and equipment Transportation equipment Other facilities Leasehold improvements Total Net
	$7,084,309	$ 485,770	$ (409,980)	$ `－`	$7,160,099
	$5,945,002				$6,008,333

The Company mortgaged or pledged property, plant and equipment, see Note 28.

12. LEASE

(1) Right-of-use assets

) Right-of-use assets
Item		For the Year Ended December 31, 2020
	Balance, Beginning of year	Additions	Disposals	Effect of Exchange Rate changes	Balance, End of year
Cost Buildings and structures Transportation equipment Total Accumulated depreciation Buildings and structures Transportation equipment Total Net Item	$ 11,855 3,004	$ 11,870 9,886	$ (11,855) (757)	$ `－` `－`	$ 11,870 12,133
	$ 14,859	$ 21,756	$ (12,612)	$ `－`	$ 24,003
	$ 5,928 1,295	$ 5,927 2,548	$ (11,855) (757)	$ `－` `－`	$ `－` 3,086
	$ 7,223	$ 8,475	$ (12,612)	$ `－`	$ 3,086
	$ 7,636				$ 20,917

	Balance, Beginning of year	Additions	Disposals	Effect of Exchange Rate changes	Balance, End of year
Cost Buildings and structures Transportation equipment	$ 11,855 3,004	$ `－` `－`	$ `－` `－`	$ `－` `－`	$ 11,855 3,004

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$ 14,859	$ `－`	$ `－`	$ `－`	$ 14,859
$ `－` `－`	$ 5,928 1,295	$ `－` `－`	$ `－` `－`	$ 5,928 1,295
$ `－`	$ 7,223	$ `－`	$ `－`	$ 7,223
$ 14,859				$ 7,636

(2) Lease liabilities

Lease liabilities
December 31, 2020 Lease liabilities-current $ 9,327 Lease liabilities-noncurrent 11,532 Total $ 20,859 Ranges of discountrates for lease liabilities`：` For the Year Ended December 31, 2020 Buildings 1.0299`～`1.1576% Transportation equipment 1.0291`～`1.1576% Other lease information For the Year Ended December 31, 2020 Expenses relating to short-term leases $ 2,520 Expenses relating to low-value asset leases $ 145 Total cash outflow for leases $ 10,334 December 31, 2020 Short-term and low-value lease commitment amounts $ 1,439 ESTMENT PROPERTY,NET December 31, 2020 st $ 332,287 s : accumulated depreciation (941) al $ 331,346 r value $ 337,809 For the Year Ended December 31, 2020	December 31, 2019
	$ 6,036 645
	$ 6,681
	For the Year Ended December 31, 2019
	1.1576`％` 1.1576`％` For the Year Ended December 31, 2019
	$ 2,520
	$ 423
	$ 11,247
	December 31, 2019
	$ 1,635
	December 31, 2019
	$ 332,287 (912)
	$ 331,375
	$ 336,492
	For the Year Ended December 31, 2019

Ranges of discountrates for lease liabilities ：

(3) Other lease information

13. INVESTMENT PROPERTY,NET

Cost

Less : accumulated depreciation Total

Fair value

Cost

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Balance, Beginning of year $ 332,287 Additions `－` Balance, End of year 332,287 Accumulated depreciation and impairment Balance, Beginning of year 912 Depreciation 29 Balance, End of year 941 Net $ 331,346	$ 332,287 `－`
	332,287
	883 29
impairment Balance, Beginning of year Depreciation Balance, End of year Net
	912
	$ 331,375

(1) The fair value of the land at 2th subsection of Hutian section in Beitou district was the valuation result of the independent appraiser by adopting the comparison method for the valuation method; the fair value of other investment property was based on the transaction price of sections nearby, which all classified as level 3 of the fair value.

(2) The rental income generated by investment real estate in 2020 and 2019 were NT$17 thousand, respectively.

14. SHORT-TERM BORROWINGS

SHORT-TERM BORROWINGS
Credit borrowings Letter of credit borrowings Secured borrowings Related parties borrowings Total Range of interest rate	December 31, 2020 $ 3,730,000 702,612 2,060,000 569,600 $ 7,062,212 0.45`％～`1.20`％`	December 31, 2019
		$ 3,280,000 792,899 1,480,000 509,660
		$ 6,062,559
		0.65`％～`5.00`％`

(1) Please refer to Note 27 for the borrowings from the related parties.

(2) The Company mortgaged or pledged short-term borrowings, see Note 28.

15. SHORT-TERM NOTES AND BILLS PAYABLE

Commercial paper Less: discounts on bills payable Net Range of interest rate	December 31, 2020 $ 480,000 (387) $ 479,613 1.000`％～`1.098`％`	December 31, 2019
		$ 250,000 (292)
		$ 249,708
		1.068`％～`1.128`％`

(1) The guarantor accepting institution of the Company’s commercial paper payable were

all bills finance companies. The commercial paper payable was measured at the initial

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per value since the impact of discounting was insignificant.

(2) The Company mortgaged or pledged short-term notes ans bills payable, see Note 28.

16. OTHER PAYABLES

16.	OTHER PAYABLES
17.	Salary and wages payable Interest payable Pension expense payable Other accrued expenses Machinery and Equipment payable Employee vacation payable Subtotal Other payable to related parties Total PROVISIONS-CURRENT Finished product compensation loss	December 31, 2020 $ 118,318 4,195 5,192 193,132 27,231 20,339 $ 368,407 $ 719 $ 369,126 December 31, 2020 $ 10,100	December 31, 2019
			$ 121,414 6,447 5,320 174,310 45,839 18,869
			$ 372,199
			$ 1,088
			$ 373,287
			December 31, 2019
			$ 9,300

(1) The reserve to compensate the loss of finished products is to protect the goodwill of the Company and the rights of the consumer. When the tire purchased from the Company has damage which is proved to be the defect during the manufacturing process after the investigation, the Company is responsible for compensation depending on the extent of the damage. This compensation is identified as the cost of after-sale service. The reserve to compensate the loss of finished products is estimated by experience and offset upon the actual occurrence of maintenance.
(2) The above reserve was undiscounted due to the short term or insignificant discounting impact.

18. LONG-TERM BORROWINGS

LONG-TERM BORROWINGS
Secured borrowings`：` Hua Nan Commercial Bank (A) Hua Nan Commercial Bank (B) Cathay United Bank(C) Hua Nan Commercial Bank(D)	December 31, 2020	December 31, 2019	Expiry Date
	$ 81,818 `－` 50,000 190,000	$ 245,455 137,500 100,000 380,000	110.1.29 109.5.29 110.10.23 110.9.2

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Bank of Taiwan(E) Hua Nan Commercial Bank(F) Hua Nan Commercial Bank(G) Total Less : Current portion Long-term borrowings Range of interest rate	178,030 300,000 250,000	320,455 111.1.24 `－` 111.3.23 `－` 111.9.8 1,183,410 (683,561) $ 499,849 1.25`％～`1.46`％`
	1,049,848 (789,242)
	$ 260,606
	0.94`％～`1.46`％`

(A)The loan period is six years, and the principal is amortized evenly in 12 installments.

(B)The loan period is two years, and the principal is amortized evenly in 4 installments.
(C) The loan period is 3 years, the principal is amortized quarterly in 12 installments, and the balance is paid off at the expiration date.
(D) The loan period is two years, and the principal is amortized evenly in 4 installments.

(E) The loan period is three years, and the principal is amortized evenly in 12 installments.

(F) The loan period is two years, and the principal is amortized evenly in 4 installments.

(G) The loan period is two years, and the principal is amortized evenly in 4 installments.

(H) The Company mortgaged or pledged long-term borrowings notes ans bills payable, see

Note 28.

19. RETIRED BENEFIT PLANS

(1) Defined contribution plans

The Company adopted a pension plan according to the Labor Pension Act (the “LPA”), which is a defined contribution plan. Based on the LPA, the Corporation makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages. Accordingly the Company recognized expenses of NT$35,580 thousand and NT$29,877 thousand in the parent company only statements of comprehensive income ended December 31, 2020 and 2019, respectively.

(2) Defined benefit plans

A. The Company adopted the defined benefit plan under the Labor Standards Law, under which pension benefits are calculated on the basis of the length of service and average monthly salaries of the six months before retirement. The company contributed amounts equal to 15% of total monthly salaries and wages to a pension

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fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name.

Before the end of each year, the Company assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Company is required to fund the difference in one appropriation that should be made before the end of March of the next year.

The pension costs of the defined benefit plans recognized in the parent company

only statements of comprehensive income were as follows:

only statements of comprehensive income were as follows:
For the Year Ended December 31, 2020 Current service cost $ 12,100 Net interest expense 1,062 Components of defined benefit costs recognized in profit or loss 13,162 Remeasurement on the net defined benefit liability: Return on plan assets (4,511) Actuarial loss arising from changes in financial assumptions 4,986 Actuarial loss (gain) arising from experience adjustments (6,183) Components of defined benefit cost recognized in other comprehensive income (5,708) Total $ 7,454	For the Year Ended December 31, 2019
	$ 12,309 1,488
	13,797
	(4,890) 3,553 (1,229)
	(2,566)
	$ 11,231

The pension costs of the aforementioned defined benefit plans were recognized in

profit or loss by the follows categories:

Operating costs Selling and marketing expenses General and dministrative expenses Research and development expenses Total	For the Year Ended December 31,2020 $ 9,676 588 1,930 968 $ 13,162	For the Year Ended December 31,2019
		$ 10,205 631 1,982 979
		$ 13,797

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B. The amount arising from the defined benefit obligations of the Company in the

parent company only balance sheets were as follows:

		December 31, 2020	December 31, 2020	December 31, 2019	December 31, 2019
Present value of defined benefit obligation		$	269,784	$	269,182
Fair value of plan assets			178,939		156,586
Net defined benefit liabilities		$	90,845	$	112,596
Movements in the present value of		the defined benefit obligations were as follows:
		For the Year Ended		For the Year Ended
		December 31, 2020		December 31, 2019
Balance, beginning of year		$	269,182	$	272,492
Current service cost			12,100		12,309
Interest expense			2,768		3,250
Remeasurement:
Actuarial loss arising	from
changes in financial			4,986		3,553
assumptions
Actuarial loss (gain) arising experience adjustments	form		(6,183)		(1,229)
Benefits paid from plan assets			(13,069)		(21,193)
Balance, end of year		$	269,784	$	269,182
Movements in the fair value	of the	plan assets were as follows:
		For the Year Ended		For the Year Ended
		December 31, 2020		December 31, 2019
Balance, beginning of year		$	156,586	$	140,541
Interest income			1,706		1,762
Remeasurement:
Return on plan assets			4,511		4,890
Contributions from employer			29,205		30,586
Benefits paid from plan assets			(13,069)		(21,193)
Balance, end of year		$	178,939	$	156,586

Movements in the present value of the defined benefit obligations were as follows:

Movements in the fair value of the plan assets were as follows:

The fund assets of the Company’s defined benefit pension plan are deposited to the

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specific account of the Trust Department of the Bank of Taiwan in the name of the Supervisory Committee for Labor Pension Reserve. The Pension Fund Supervisory Committee of the Council of Labor regularly monitors and reviews the investment portfolio of the assets and carefully establishes the investment portfolio and diverse outsourcing types, enhances the risk control and timely adjusts the investment strategies based on the changes in the market to improve the stable profit of the fund. The central competent authority with the collaboration of the Ministry of Finance commissioned the financial institution to manage the revenues, expenditures, safeguard and utilization of the plan assets. The minimum yield may not be less than the interest income generated from a local bank’s two-year time deposit; any deficits thereof shall be made up by the national treasury. The revenues, expenditures, safeguard and utilization of the plan assets was established by the central competent authority, therefore the Company has no right to participate in the operation and management of such fund. For the fair value of the total assets under the fund on December 31, 2020 and 2019, please refer to the labor pension fund utilization report published by the government each year.

C. The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The principal assumptions of the actuarial valuation were as follows:

Discount rate Future salary rate increase	December 31, 2020 0.80`％` 2.75`％`	December 31, 2019
		1.10`％` 2.75`％`

If the principal actuarial assumptions adopted have changed, the affected amount of increase (decrease) in the present value of the defined benefit obligation is as follows:

follows:
Discount rate 0.25`％`increase 0.25`％`decrease	December 31, 2020 $ (4,172) 4,339	December 31, 2019
		$ (4,423) 4,607

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Future salary rate increase
1.00`％`increase	18,148	19,440
1.00`％`decrease	(15,851)	(16,891)

D. The Company expects to make contributions of NT$32,000 thousand to the defined benefit plans in the next year starting from December 31, 2020. The weighted average duration of the defined benefit obligation is 10.6 years.

20. EQUITY

(1) Capital stock

December 31, 2020 Numbers of shares authorized $ 10,000,000 Shares issued 8,339,349 par value 10 dollars apital EARNINGS December 31, 2020 From convertible bonds $ 18,505 From share of changes in equities of associates 465 Total $ 18,970	December 31, 2019
	$ 10,000,000 8,339,349 10 dollars
	December 31, 2019
	$ 18,505 465
	$ 18,970

(2) Capital EARNINGS

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Capital EARNINGS shall be distributed by cash. Also, the capital EARNINGS from long-term investments may not be used for any purpose.

(3) Retained earnings and dividend policy

A. The amendment to the Articles of Incorporation of NANKANG was approved at the regular shareholders meeting on May 16, 2019 to specify that the EARNINGS earning distribution or loss off-setting proposal may be proposed at the close of each half fiscal year. If there are earnings at each half fiscal year, the Company shall estimate and preserve the payable taxes, cover loss carried forward, estimate preserved employee remuneration, appropriate 10% of the earnings as legal reserve and also make provision/reversal of special reserves pursuant to laws. The remaining balance shall be added to the undistributed earnings carried from half fiscal year as the shareholder dividend. For the distribution of earnings proposed by the board of directors, when distributing in cash, it shall be resolved by the board of directors; when distributed in issuing of new shares, the proposal shall be submitted to the shareholders meeting and distributed after the resolution of the meeting.

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directors; and submits a report to the shareholders’ meeting.

Pursuant to Article 241 of the Company Act, NANKANG distribute its legal reserve and the capital reserve, in whole or in part, by issuing new shares or in cash in proportion to the original shareholding ratio of the shareholders, it shall be conducted based on the resolution of the previous paragraph.

For the distribution of earnings of NANKANG, the stock dividend is between 70% to 100% and the cash dividend is between 0% to 30% in principle. The above ratio may be adjusted depending on the actual needs.

B. According to Company Law, the appropriation for legal capital reserve shall be made until the reserve equals the Company’s paid-in capital. The reserve may be used to offset a deficit, or be distributed as dividends in cash or stocks for the portion in excess of 25% of the paid-in capital if the Company incurs no loss.
C. The allocation of special reserve and the distribution of the shareholders’ dividend and bonus is drafted by the board of directors and submitted to the shareholders’ meeting for resolution and adoption. If the stock dividend in the preceding paragraph shows no profit or the profit is not enough, the principal shall not be used as the dividend.
D. When distributing the earnings regulations pursuant to existing , The Company is required to set aside additional special reserve equivalent to the net debit balance of the other components of shareholders’ equity items (including exchange differences on translating foreign operations, unrealized gain [loss] on available-for-sale financial assets, and the gain or loss on the hedging instrument relating to the effective portion of a cash flow hedge). For any subsequent reversal of other net deductions from shareholders’ equity, the amount reversed may be distributed.
E. When first applying the IFRSs pursuant to the regulations of No.1010012865 issued by FSC, NANKANG chose to adopt the exemption in IFRS 1 to re-stated the retained earnings and appropriate the same amount as the special reserve. When relative assets are used, disposed or reclassified, the original rate to state the special reserves shall be used to reverse the allocation of earnings. The balance of the

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special reserve remained unchanged in 2020 and 2019.

F. The proposal of 2020 interim earnings distribution approved by the board of directors

of the Company is stated as follows:

of the Company is stated as follows:
July 1 to December 31, 2020 Resolution date of the board of directors March 10, 2021 Legal reserve $ 40,307 Cash dividends to shareholders $ 481,349 Cash dividends per share(NT$) $ 0.60	January 1 to June 30, 2020
	August 11, 2020 $ 44,587 $ 280,787 $ 0.35

G. The proposal of 2019 interim earnings distribution approved by the board of

directors of the Company is stated as follows:

directors of the Company is stated as follows:
July 1 to December 31, 2019 Resolution date of the board of directors February 25, 2020 Legal reserve $ 54,015 Cash dividends to shareholders $ 601,687 Cash dividends per share(NT$) $ 0.75	January 1 to June 30, 2019
	August 7, 2019 $ 59,758 $ 401,125 $ 0.50

H. The Company’s earning allocation for the year of 2018 , were approved in the

regular meeting of shareholders on May 16, 2019, The appropriations and dividends

per share were as follows:

Legal reserve Cash dividends to shareholders Cash dividends per share(NT$)	Appropriation of Earnings
	$ 17,496 $ 160,532 $ 0.1925

(4) Other equity

21.Treasury shares

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For the Year Ended December 31, 2020

Cause	Number of shares at January 1 (Thousand Shares)	Increase in current period (Thousand Shares) `－`	Decrease in current period (Thousand Shares)	Number of shares at December 31 (Thousand Shares)
Transfer of shares to employees Cause	31,686		`－`	31,686
	For the Year Ended		December 31, 2019
	Number of shares at January 1 (Thousand Shares)	Increase in current period (Thousand Shares) `－`	Decrease in current period (Thousand Shares)	Number of shares at December 31 (Thousand Shares)
Transfer of shares to employees	31,686		`－`	31,686

Under the Securities Exchange Act, the Corporation shall neither pledge treasury shares nor exercise shareholder’s rights on these shares, such as rights to dividends and to vote.

22. OPERATING REVENUES

(1) Disaggregation of revenue from contracts with customers:

By product	For the Year Ended December 31, 2020 $ 6,218,316 For the Year Ended December 31, 2020 $ 406,563 3,796,893 464,485 808,913 741,462 $ 6,218,316 December 31, 2020 $ 55,039	For the Year Ended December 31, 2019
Tire By geography		$ 6,821,212
		For the Year Ended December 31, 2019
Taiwan United States Europe Other regions in Asia Other Total Contract balances Contract liabilities-current Advance sales receipts		$ 394,267 4,100,739 449,175 870,752 1,006,279
		$ 6,821,212
		December 31, 2019
		$ 18,530

(2) Contract balances

Revenue recognized that was included in the contract liability balance at the beginning

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of the period :

of the period :
For the Year Ended December 31, 2020 Balance of the contract liabilities at the beginning recognized in the revenue in current period $ 10,676 NON-OPERATING INCOME AND EXPENSES (1) OTHER INCOME For the Year Ended December 31, 2020 Dividend income $ 9,033 Rental income 2,632 Compensation income 28,245 Others 34,432 Total $ 74,342 (2)OTHER GAINS AND LOSSES For the Year Ended December 31, 2020 Gains on disposal of property, plant and equipment $ (1,197) Loss on disposal of investments `－` Foreign exchange gains (losses) (20,774) Gains on financial assets (liabilities) at fair value through profit or loss 425,498 Loss from fire damage (26,813) Miscellaneous disbursements (218) Total $ 376,496 (3)FINANCE COSTS For the Year Ended December 31, 2020 Interest expense Bank loans $ 98,847 Lease liabilities 90 Less: interest capitalized (5,503) Total $ 93,434	For the Year Ended December 31, 2019
	$ 23,614
	For the Year Ended December 31, 2019
	$ 6,022 `－` 68,506 `－`
	$ 74,528
	For the Year Ended December 31, 2019
	$ (2,668) (180) 14,773 22,758 `－` 16,658
	$ 51,341
	For the Year Ended December 31, 2019
	$ 120,807 127 (8,424)
	$ 112,510

23. NON-OPERATING INCOME AND EXPENSES

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Capitalization rates

1.03 ％～ 1.13 ％ 1.14 ％～ 1.16 ％

24. INCOME TAX

(1) Income tax recognized in profit or loss
(A) Income tax expense consisted of the following:

	For the Year Ended December 31, 2020	For the Year Ended December 31, 2020	For the Year Ended December 31, 2019	For the Year Ended December 31, 2019
Current income tax charge	$	181,656	$	178,367
Additional income tax on
unappropriated earnings		`－`		`－`
Income tax adjustments on prior years		10,200		8,700
Net changes on temporary
differences of deferred		25,667		(48,358)
income tax
Income tax expense recognized in profit or loss	$	217,523	$	138,709
A reconciliation of income before	income tax and income		tax expense recognized
in profit or loss was as follows:
	For the Year Ended December 31, 2020		For the Year Ended December 31, 2019
Income before income tax	$	1,061,901	$	1,274,393
Tax calculated base on profit	$	212,380	$	254,879
before tax and statutory tax
rate
Additional income tax on		`－`		`－`
undistributed earnings
Net investment income or loss		(19,886)		(162,235)
accounted for using equity
method
Dividend revenue		85,743		91,787
Net gain or loss on disposals		(15,241)		`－`
of investment
Valuation gain(loss) on		(69,858)		(4,552)
financial investments
Non-deductible expenses		(11,482)		(1,512)
Income tax adjustments on		10,200		8,700
prior years
Net changes on temporary		25,667		(48,358)
differences of deferred
income tax

(B) A reconciliation of income before income tax and income tax expense recognized in profit or loss was as follows:

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Income tax expense recognized in $ 217,523 $ 138,709 profit or loss

(2) Income tax expense (benefit) recognized in other comprehensive income

For the Year Ended December 31, 2020[ For the Year Ended ] December 31, 2019

Deferred tax expenses (income) Current year Remeasurement of defined benefit obligation Income tax expense (benefit) recognized in the components of other comprehensive income	$ 1,142 $ 513 $ 1,142 $ 513

(3) Deferred income tax balance

The analysis of deferred income tax in the parent company only Balance Sheets was as

follows:

lows:
For the Year Ended Balance, Beginning of year Recognized in Profit or Loss Temporary difference Pension $ 22,519 $ (3,208) Deferred sale benefit 625 (467) Finished product compensation loss preparation 1,860 160 Other 2,043 (546) Deferred tax assets $ 27,047$ (4,061) Temporary difference Unrealized investment benefits $ (65,324) $ (21,608) Foreign exchange net gain or loss foreign operations (2,455) 2 Deferred tax liabilities $ (67,779) $ (21,606) For the Year Ended Balance, Beginning of year Recognized in Profit or Loss Temporary difference Pension $ 26,390 $ (3,358) Deferred sale benefit 1,444 (819) Finished product compensation loss preparation 1,680 180 Other 1,506 537 Deferred tax assets $ 31,020$ (3,460) Temporary difference	For the Year Ended		December 31,2020
	Balance, Beginning of year	Recognized in Profit or Loss	Recognized in Other Comprehensive Income	Balance, End of year
		$ (3,208) (467) 160 (546)	$ (1,142) `－` `－` `－`	$ 18,169 158 2,020 1,497
	$ 27,047	$ (4,061)	$ (1,142)	$ 21,844
		$ (21,608) 2	$ `－` `－`	$ (86,932) (2,453)
	$ (67,779)	$ (21,606)	$ `－`	$ (89,385)
	Balance, Beginning of year	Recognized in Profit or Loss	Recognized in Other Comprehensive Income	Balance, End of year
		$ (3,358) (819) 180 537	$ (513) `－` `－` `－`	$ 22,519 625 1,860 2,043
	$ 31,020	$ (3,460)	$ (513)	$ 27,047

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Unrealized investment benefits $ (119,195) Foreign exchange net gain or loss foreign operations (402) Deferred tax liabilities $ (119,597)	Unrealized investment benefits $ (119,195) Foreign exchange net gain or loss foreign operations (402) Deferred tax liabilities $ (119,597)	$ 53,871 (2,053)	$ `－` `－`	$ (65,324) (2,455)
	$ (119,597)	$ 51,818	$ `－`	$ (67,779)

(4)The information of unrecognized deferred income tax liabilities associated with

investments

(5)Income tax examination

The tax authorities have examined income tax returns of the Company through 2018.

25. EARNINGS PER SHARE

(1) Basic earnings per share

Net income Weighted-average number of ordinary shares for basic earnings per share(in thousand shares) Basic EPS (NT$) Diluted earnings pre share Net income Weighted-average number of ordinary shares for basic earnings per share (in thousand shares) Assumed conversion of all dilutive potential ordinary shares Employees’ remuneration (in thousand shares) Weighted-average number of common stocks after dilution (in thousand shares) Diluted EPS (NT$)	For the Year Ended December 31, 2020 $ 844,378 802,249 $ 1.05 For the Year Ended December 31, 2020 $ 844,378 802,249 25 802,274 $ 1.05	For the Year Ended December 31, 2019 $ 1,135,684 802,249 $ 1.42 For the Year Ended December 31, 2019 $ 1,135,684 802,249 27 802,276 $ 1.42

(2) Diluted earnings pre share

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26. THE PERSONNEL, DEPRECIATION AND AMORTIZATION EXPENSES OF THE

COMPANY

COMPANY
For the Year Ended December 31, 2020 Classified as operating cost Classified as operating expenses Total Personnel expenses $ 869,469 $ 324,982 $ 1,194,451 Payroll expense 763,478 272,304 1,035,782 Insurance expense 60,485 20,285 80,770 Pension 31,644 17,480 49,124 Compensation to directors `－` 3,125 3,125 Others 13,862 11,788 25,650 Depreciation 479,707 35,588 515,295 Amortization `－` `－` `－`	For the Year Ended December 31, 2020			For the Year Ended December 31, 2019
	Classified as operating cost	Classified as operating expenses	Total	Classified as operating cost	Classified as operating expenses	Total
		$ 324,982 272,304 20,285 17,480 3,125 11,788 35,588 `－`	$ 1,194,451 1,035,782 80,770 49,124 3,125 25,650 515,295 `－`	$ 896,299 785,745 61,835 31,685 `－` 17,034 458,908 `－`	$ 318,278 272,810 19,290 13,765 2,866 9,547 34,085 `－`	$ 1,214,577 1,058,555 81,125 45,450 2,866 26,581 492,993 `－`

Note ：

(1) As of December 31, 2020 and 2019, the Company had 1,377 and 1,388 employees, respectively. There were 3 non-employee directors for both year.
(2) Companies whose stocks are listed on the stock exchange or listed on the stock counter trading center should disclose the following information:
(A)The Company's average employee benefit expenses for the years ended December 31, 2020 and 2019 were NT$867 thousand and NT$873 thousand , respectively.
(B)The Company's average salary expenses for the years ended December 31, 2020 and 2019 were NT$752 thousand and NT$763 thousand.
(C)The Company's average salary expenseadjustment for the year ended December 31, 2020 decreased by 1.44%.
(D)The Company established an audit committee on June 13, 2019 in accordance with the Securities and Exchange Act of the ROC, and the audit committee was formed by all independent directors to replace the supervisors.
(E) The Company’s policy for compensation of directors, managers and employees is as follows:
- (a) Directors Compensation Policy

The compensation of the Company's directors (including independent directors) is governed by the "Regulations Governing Compensation and Bonus to Directors and Officers" approved by the Board of Directors.The Company's directors are compensated by reference to industry standards in order to achieve an objective and fair basis of payment and to enable the members of the Board of Directors to achieve a combination

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of motivation and discipline.

(b) Remuneration policy for the managements and Compensation policy for employees
The Company's internal policies and standards for the compensation of managements and employees ：

Salary structure mainly consists of monthly salary, year-end bonus and employee compensation.The amount of year-end bonuses and employee compensation are based on their contribution to the Company's operations and the evaluation of their performance for the year in accordance with the Work Rules and Regulations, and are used as the criteria for payment.

(1) According to the Articles of Incorporation of the Company, if there is profit after annual closing (the profit before tax deducting the remunerations for employees), the Company shall allocate 0.1%~1% thereof as the remuneration to employees. The distribution is resolved by the board of directors and reported to the shareholders’ meeting. However, if the Company has accumulated losses, priority shall be given to covering accumulated losses before allocating the remuneration for the employee and its balance shall be allocated on a pro rata basis as referred to in the preceding paragraph.
(2) The employee remunerations estimated by the Company were NT$1,063 thousand and NT$1,276 thousand in 2020 and 2019 respectively. Shall there be any change to the annual parent company financial report after the reporting date, the accounting treatment shall be applied, and the adjustment is accounted for in the next year.
(3) The Company resolved at shareholders’ meeting to distribute the 2019 employee remuneration in cash of NT$1,276 thousand on May 13, 2020, which had no difference with the estimated amount in 2019.
(4) The information about the appropriations of the Company’s profit sharing bonus to employees and compensation to directors is available at the Market Observation Post System website.

27.RELATED PARTY TRANSACTIONS

(1) Related party name and category

Related Party Name Taipei NanHung Rubber Tire Corp., Ltd.

Related Party Category Subsidiary

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Nanzong Construction Developments, Co., Ltd.	Subsidiary
Nankang International Co., Ltd.	Subsidiary
Nankang Tire Netherlands B.V	Subsidiary
Nankang (ZhangJiaGang Free Trade Zone) Rubber	Subsidiary held indirectly
Industrial Co., Ltd.
NanGuan Rubber Tire Corp., Ltd.	Associates
Zhikai Development Co., Ltd.	Top 10 shareholders of the
	parent company
Yuanre Development Co., Ltd.	Top 10 shareholders of the
	parent company

(2) The significant transactions between the Company and its related parties are disclosed

summarized as follows:

A. Revenue

For the Year Ended December 31, 2020 Taipei NanHung Rubber Tire Corp., Ltd. $ 290,361 Nankang Tire Netherlands B.V 33,730 Nankang (ZhangJiaGang Free Trade Zone) Rubber Industrial Co., Ltd. 5,248 NanGuan Rubber Tire Corp., Ltd. 112,236 Total $ 441,575	For the Year Ended December 31, 2019
	$ 270,055 35,113 4,764 107,003
	$ 416,935

(1)The sale is made based on the price of the general suppliers.

(2)The subsidiaries and the affiliated companies transfer the payment to the

Company based on the actual payment received weekly.

B. Purchases

For the Year Ended December 31, 2020 Nankang (ZhangJiaGang Free Trade Zone) Rubber Industrial Co., Ltd. $ 243,748	For the Year Ended December 31, 2019
	$ 243,661

This is the purchase for triangle trade, therefore there is no other trading conditions with the non-related party for comparison.

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C. Notes receivable

December 31, 2020 Taipei NanHung Rubber Tire Corp., Ltd. $ 3,067 NanGuan Rubber Tire Corp., Ltd. 2,760 Total $ 5,827 D. Accounts receivable December 31, 2020 Taipei NanHung Rubber Tire Corp., Ltd. $ 62,567 Nankang Tire Netherlands B.V 554 NanGuan Rubber Tire Corp., Ltd. 26,037 Nankang (ZhangJiaGang Free Trade Zone) Rubber Industrial Co., Ltd. 1,190 Total $ 90,348 E. Other receivables December 31, 2020 Nankang (ZhangJiaGang Free Trade Zone) Rubber Industrial Co., Ltd. $ 1,795 F.Accounts payable December 31, 2020 Nankang (ZhangJiaGang Free Trade Zone) Rubber Industrial Co., Ltd. $ 140,042 G.Other payables December 31, 2020 Nankang Tire Netherlands B.V $ 719 H. Unrealized profit from sales December 31, 2020	December 31, 2019
	$ 2,793 2,667
	$ 5,460
	December 31, 2019
	$ 81,421 13,993 32,378 1,033
	$ 128,825
	December 31, 2019
	$ 3,846
	December 31, 2019
	$ 122,261
	December 31, 2019
	$ 1,088
	December 31, 2019

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Taipei NanHung Rubber Tire Corp., Ltd. $ 5,457 Nankang Tire Netherlands B.V 1,152 NanGuan Rubber Tire Corp., Ltd. 876 Total $ 7,485	$ 7,379 1,797 1,039
	$ 10,215

I. Asset transactions

For the Year Ended December 31, 2020

Nankang (ZhangJiaGang Free Trade Zone) Rubber Industrial Co., Ltd.	Item	Price	Disposal gain	Deferred gain
	Selling of the machinery and equipment and entrusted purchasing for a batch of materials as well as the machinery and equipment	$ 11,449	$ 1,387	$ `－`

For the Year Ended December 31, 2019

Nankang (ZhangJiaGang Free Trade Zone) Rubber Industrial Co., Ltd. Nankang (ZhangJiaGang Free Trade Zone) Rubber Industrial Co., Ltd.	Item	Price	Disposal gain	Deferred gain
	Selling of the machinery and equipment and entrusted purchasing for a batch of materials as well as the machinery and equipment Purchased machinery and equipment	$ 24,481 1,064	$ 1,121 `－`	$ `－` `－`

J. Endorsement/guarantees

(A) The information on the endorsement/guarantees made for others is as follows:

December 31, 2020 Nankang International Co., Ltd. $ 591,000 Nankang (ZhangJiaGang Free Trade Zone) Rubber Industrial Co., Ltd. `－` Nanzong Construction Developments, Co., Ltd. 450,000 Zhikai Development Co., Ltd. 33,350	December 31, 2020	December 31, 2019 $ 346,000 75,000 450,000 33,350

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Yuanre Development Co., Ltd. Total	16,650	16,650 $ 921,000
	$ 1,091,000

(a) As of December 31 in 2020 and 2019, the amount of the cashier's checks provided by the Company as the collateral for the bank financing of Nankang (ZhangJiaGang Free Trade Zone) Rubber Industrial Co., Ltd. were US$0 thousand and US$2,500 thousand, respectively.

(b) As of December 31 in 2020 and 2019, the amount of the Company’s export negotiation approved by the correspondent bank were US$19,500 thousand and US$14,000 thousand, respectively and were provided for the use of Nankang International Co., Ltd..

(B) The information on the endorsement/guarantees provided to the Company by the related party is as follows:

related party is as follows:
Related party Nanzong Construction Developments, Co., Ltd.	December 31, 2020 $ 7,000,000	December 31, 2019
		$ 7,000,000

Nanzong Construction Developments, Co., Ltd. provided land and buildings as the collateral for the loans of the Company.

K. Financing

(A) The information on the Company’s loaning of funds to the related party is as

follows:

follows:
NanGuan Rubber Tire Corp., Ltd.	Item	December 31, 2020	December 31, 2019
	Other receivables from related parties-current	$ `－`	$ 120,000

The interest of the financing to NanGuan Rubber Tire Corp., Ltd. was calculated

in the interest rate of 1.55%. The interest revenues received were NT$824 thousand and NT$1,925 thousand in 2020 and 2019, respectively.

(B) The information on the financing from the related party is as follows:

Nankang International Co., Ltd	Item	December 31, 2020	December 31, 2019
	Short-term borrowings	$ 569,600	$ 509,660

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Nankang International Co., Ltd. provided a short-term borrowings without interest to the Company.

L.Compensation of key management personnel

The compensation to directors and other key management personnel were as follows:

follows:
Short-term employee benefits Post-employment benefit Total	For the Year Ended December 31, 2020 $ 18,979 511 $ 19,490	For the Year Ended December 31, 2020
		$ 18,953 452
		$ 19,405

28. PLEDGED ASSETS

28.	PLEDGED ASSETS
29.	Items	Purpose	Carrying Amount
			December 31, 2020	December 31, 2019
			$ 285 3,360,516	$ 300 3,376,898
			$ 3,360,801	$ 3,377,198

COMMITMENTS

(1) Significant commitments

A. The balance of the Company’s LC amounts `：`

30.	December 31, 2020 US$ (thousand) $ 10,016 JP`￥`(thousand) `－` B. Non-payment amount for contracted equipment`：` December 31, 2020 NT$(thousand) $ 399,627 SUBSEQUENT LOSSES: None.	December 31, 2019
		$ 8,048 19,300 December 31, 2019
		$ 330,292

SUBSEQUENT EVENTS: None.

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32. CAPITAL MANAGEMENT

In order to maintain or adjust the capital structure, the Company may adjust the dividend amount of the shareholders, issue new shares or repurchase the shares of the Company.

33. FINANCIAL INSTRUMENTS

(1) Categories of financial instruments

Categories of financial instruments
Financial assets Financial assets at amortized cost Financial assets at fair value through profit or loss Total Financial liabilities Financial assets at amortized cost Financial liabilities at fair value through profit or loss Total	December 31, 2020 $ 1,310,647 2,351,265 $ 3,661,912 $ 9,310,180 99 $ 9,310,279	December 31, 2019
		$ 1,742,159 103,198
		$ 1,845,357
		$ 8,142,968 161
		$ 8,143,129

A. The balance include financial assets at amortized cost, which comprise cash and cash

equivalents, notes receivale, accounts receivable, other receivables and refundable deposits.

B. The balances include financial liabilities at amortized cost, which comprise shortterm and long-term borrowings, short-term notes and bills payable, notes payable,

accounts and other payables, and guarantee deposits.

(2) Fair value information
A. Fair value of financial instruments carried at amortized cost

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The book value of the financial assets and liabilities measured at amortized cost by the Company is close to the reasonable amount of the fair value.

B. The different levels that the inputs to valuation techniques are used to measure fair value of financial instruments have been defined as follows ：
(A) Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;
(B) Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
(C) Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).
C. Concerning the financial instruments measured by fair values, the basic classification analysis of the Company in accordance with the nature, characteristics and risk as well as fair value level of asset and liability shall be as follows:
(A) The following table presents the Company’s financial assets and liabilities

measured at fair value on a recurring basis:

	December 31, 2020	December 31, 2020
Level 1	Level 2	Level 3	Total
$2,349,958 `－`	$ `－` 1,307	$ `－` `－`	$2,349,958 1,307
$2,349,958	$ 1,307	$ `－`	$2,351,265
$ `－`	$ 99	$ `－`	$ 99

Level 1	Level 2	Level 3	Total
$ 101,949 `－`	$ `－` 1,249	$ `－` `－`	$ 101,949 1,249
$101,949	$ 1,249	$ `－`	$103,198

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Financial liabilities at FVTPL －－ Interest rate swap $ $ 161 $ $ 161 contract

(B) The financial asset and liability measured by fair value on non-repeatable

foundation: none.

D. The methods and assumptions used by the Company to measure fair value is as

follows:

(A) The Company’s fair value inputs adopting the quoted market price are listed in

the following based on the characteristics of the instruments:

the following based on the characteristics	of the instruments:
Item Stock of listed (OTC) companies Stock of emerging companies	Marketquoted
	Close price Average transaction price

(B) The forward exchange contract is often valuated based on the current forward

rate.

E. There was no transfer between fair value measurement level 1 and level 2 in 2020 and 2019.

(3) Financial risk management objectives

(4) Market risk

A. Foreign currency risk

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The maturity of the derivative financial instruments engaged by the Company is all less than six months, which does not meet the terms for accounting hedge.

The net investment in the foreign operation was for strategic investment, therefore the Company did not adopt any hedging policy against it.

Monetary items USD EUR GBP JPY CNY	December 31, 2020 $ 3,921 (440) (92) (1) `－`	December 31, 2019
		$ 1,457 (591) (114) (2) 67

B. Interest rate risk

Interest rate risk refers the risk caused by the change in the fair value of financial

150

instruments as a result of change of the market interest rate. The interest rate risk of the company is mainly derived from variable interest rate borrowing.

C. Other price risk

For the sensitivity analysis on the price risk of the equity instruments, the calculation basis is the changes in the fair value at the end of the financial reporting. If the price of the equity instruments increased/decreased in 5%, the profit or loss of the Company would increase/decrease NT$117,562 thousand and NT$5,159 thousand in December 31, 2020 and 2019, respectively.

(5) Credit risk management

A. Business related credit risk

In order to maintain its quality of accounts receivable, the Company has set up its operation related credit risk management procedure.

The individual customer risk assessment covers the factors of an individual customer’s financial status and credit rating agency’s ratings, the Company’s

151

internal credit ratings and historical transaction records and current economic status, etc. which may affect customer’s solvency capacity.

As of December 31, 2020 and 2019, the receivable balance of the customer with sale revenue reaching above 5% accounted for 67.70% and 71.15% of the Company’s receivable balance, respectively. The concentration of the credit risk for other accounts receivable was relatively not significant.

B. Financial credit risk

(6) Liquidity risk management

The table below summarizes the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments, including principles and interests.

	December 31, 2020	December 31, 2020	December 31, 2020
Less Than 1 year	1`～`2 year	2`～`3 year	More than 3 years	Total
	$ `－` `－` 260,606 8,935	$ `－` `－` `－` 1,822	$ `－` `－` `－` 861	$ 7,541,825 718,507 1,049,848 21,083
$ 9,059,039	$ 269,541	$ 1,822	$ 861	$ 9,331,263

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$ 99	$ `－`	$ `－`	$ `－`	$ 99

Less Than 1 year	1`～`2 year	2`～`3 year	More than 3 years	Total
	$ `－` `－` 464,242 648 360	$ `－` `－` 35,606 `－` `－`	$ `－` `－` `－` `－` `－`	$ 6,312,267 646,931 1,183,409 6,707 360
$ 7,648,818	$ 465,250	$ 35,606	$ `－`	$ 8,149,674
	$ 161	$ `－`	$ `－`	$ 161
$ `－`	$ 161	$ `－`	$ `－`	$ 161

SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN

CURRENCIES

(1)The significant financial assets and liabilities denominated in foreign currencies were as

follows:

December 31, 2020	December 31, 2020	December 31, 2020
Foreign currencies (In Thousands)	Exchange Rare	Carrying Amount (NTD in Thousands)
35,567 1,277 233 49,332	28.48 35.02 38.90 28.48	$ 1,012,948 44,721 9,064 1,404,975

December 31, 2019

153

Financial assets Monetary items USD EUR GBP Financial liabilities Monetary items USD	Foreign currencies (In Thousands)	Exchange Rare	Carrying Amount (NTD in Thousands)
	42,443 1,794 289 47,302	29.98 33.59 39.36 29.98	$ 1,272,441 60,260 11,375 1,418,114

The above information is based on the functional currency of each body other than the foreign currency summary expression.

(2) There are multiple foreign currency types used in the Company and the disclosure cannot be made based on each significant foreign currency, therefore the information about exchange gain or loss of each currency is disclosed by summarization. The Company’s net gain (loss) of foreign exchange (including the realized and unrealized) were NT$(20,774) thousand and NT$14,773 thousand in 2020 and 2019, respectively.

35. OTHERS

(1) Non-cash transactions: None.
(2) Due to the COVID-19 epidemic, although the company's turnover in 2020 has decreased

compared with the previous year, it has not yet had a significant impact on the company's business and finances, and there are no doubts about the ability to continue operations, asset impairment, and financing risks.

36. ADDITIONAL DISCLOSURES

(1)Following are the additional disclosures required by the Securities and Futures

Bureau for the Company ：

A. Financings provided: See Table 1 attached.
B. Endorsement/guarantee provided: See Table 2 attached.
C. Marketable securities held (excluding investments in subsidiaries and associates):

See Table 3 attached.

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D. Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital: See Table 4 attached.
E. Acquisition of individual real estate properties at costs of at least NT$300 million or 20% of the paid-in capital: None.
F. Disposal of individual real estate properties at prices of at least NT$300 million or 20% of the paid-in capital: See Table 5 attached.
G. Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid-in capital:See Table 6 attached.
H. Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: See Table 7 attached.
I. Information about the derivative financial instruments transaction: See Notes 7.
J. Names, locations, and related information of investees over which The Company exercises significant influence: See Table 8 attached.
(2) Information on investment in mainland China
A. The name of the investee in mainland China, the main businesses and products, its issued capital,method of investment, information on inflow or outflow of capital, percentage of ownership, income(losses) of the investee, share of profits/losses of investee, ending balance, amount received as dividends from the investee, and the limitation on investee: See Table 9 attached.
B. Significant direct or indirect transactions with the investee, its prices and terms of payment, unrealized gain or loss, and other related information which is helpful to understand the impact of investment in mainland China on financial reports: See Table 9 attached.

(3) Information of major shareholder

List of all shareholders with ownership of 5 percent or greater showing the names and the number of shares and percentage of ownership held by each shareholder: See Table 10 attached.

37. SEGMENT INFORMATION

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The Company has provided the segment information disclosure in the year of 2020 consolidated financial statements.

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TABLE 1

FINANCINGS PROVIDED

(Amounts in Thousands of New Taiwan Dollars)

No. (Note 1)	Financing Company	Counter-party	Financial Statement Account	Related Party	Maximum Balance for the Period	Ending Balance (Note 6)	Amount Actually Drawn	Interest Rate	Nature for Financing (Note 4)	Transaction Amounts	Reason for Financing	Allowance for Bad Debt	Colla	teral	Financing Limits for Each Borrowing Company (Note 2)	Financing Company’s Total Financing Amount Limits (Note 3)
													Item	Value
0	NANKANG RUBBER TIRE CORP., LTD.	NANGUAN RUBBER TIRE CO., LTD.	Current assets─other receivables	Yes	$ 120,000	$`－`	$`－`	1.55%	1	$ 112,236	`－`	$`－`	`－`	`－`	$ 1,078,731	$ 4,314,923
0	NANKANG RUBBER TIRE CORP., LTD.	NANZONG CONSTRUCTION DEVELOPMENTS, CO., LTD.	Current assets─other receivables	Yes	490,000	`－`	`－`	`－`	2	`－`	Operating capital	`－`	`－`	`－`	3,236,192	4,314,923
1	NANKANG INTERNATIO NAL CO.,LTD.	NANKANG RUBBER TIRE CORP., LTD.	Short-term debt	Yes	756,250	712,000 (Note 7)	569,600 (Note 7)	`－`	2	`－`	Operating capital	`－`	`－`	`－`	4,850,470 (Note 5)	4,850,470 (Note 5)

Note 1 ： The Company and its subsidiaries are coded as follows:

1.The Company is coded “0”.
2.The subsidiaries are coded consecutively beginning from “1” in the order presented in the table above.

Note 2 ： The Company’s loaning of funds toward a single enterprise is limited to 10% of the Company’ s net value in the most recent financial statement; the limit of loan to the subsidiaries shall not exceed 30% of the Company’s net value in the most recent financial statement.

Note 3 ： The total loaning of funds is limited to 40% of the Company’s net value in the most recent financial statement. The loaning of funds between the foreign companies with 100% voting shares held by the Company directly and indirectly due to the required short-term financing, its amount is not subject to 40% of the net value.

Note 4 ： Nature of loans:.Business transaction: 1, Short-term financing: 2.

Note 5 ： The fund loaning of Nankang International Co.Ltd to the parent company is limited to 100% of the net value of Nankang International Co.Ltd. in the most recent financial statement.

Note 6 ： The balance at the end was the amount approved by the board of directors.

Note 7 ： The balance at the end was USD25,000 thousand; the actual amount disbursed was USD20,000 thousand.

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TABLE 2

ENDORSEMENTS/GUARANTEES PROVIDED

(Amounts in Thousands of New Taiwan Dollars)

No. (Note 1)	Endorsement / Guarantee Provider	Guaranteed Party	Guaranteed Party	Limits on Endorsement / Guarantee Amount Provided to Each Guaranteed Party (Note 3)	Maximum Balance for the Period	Ending Balance	Amount Actually Draw	Amount of Endorsement /Guarantee Collateralized by Properties	Ratio of Accumulated Endorsement / Guarantee to Net Equity per Latest Financial Statements	Maximum Endorsement / Guarantee Amount Allowable (Note 3)	Guarantee Provided by Parent Company	Guarantee Provided by A Subsidiary	Guarantee Provided to Subsidiaries in Mainland China
		Name	Nature of Relationship (Note 2)
0	NANKANG RUBBER TIRE CORP., LTD.	NANKANG (ZHANGJIAGANG FREE TRADE ZONE) RUBBER INDUSTRY CO.,LTD.	3	$ 5,393,654	$ 85,250	$`－`	$`－`	$`－`	0.00`％`	$ 10,787,307	`Ｙ`		`Ｙ`
0	NANKANG RUBBER TIRE CORP.,LTD.	NANKANG INTERNATIONAL CO.,LTD	2	5,393,654	664,950	664,950	591,000	591,000	5.48`％`	10,787,307	`Ｙ`
0	NANKANG RUBBER TIRE CORP., LTD.	NANZONG CONSTRUCTION DEVELOPMENTS, CO., LTD.	2	5,393,654	450,000	450,000	450,000	450,000	4.17`％`	10,787,307	`Ｙ`
0	NANKANG RUBBER TIRE CORP.,LTD.	YUANRE DEVELOPMENTS, CO., LTD.	5	5,393,654	16,650	16,650	16,650	16,650	0.15`％`	10,787,307
0	NANKANG RUBBER TIRE CORP.,LTD.	ZHIKAI DEVELOPMENTS, CO., LTD.	5	5,393,654	33,350	33,350	33,350	33,350	0.31`％`	10,787,307
1	NANZONG CONSTRUCTION DEVELOPMENTS ,CO.,LTD.	NANKANG RUBBER TIRE CORP., LTD.	4	13,023,805 (Note 5)	7,000,000	7,000,000	7,000,000	7,000,000	214.99`％`	13,023,805 (Note 5)		`Ｙ`

Note 1 ： The Company and its subsidiaries are coded as follows:

(1).The Company is coded “0”.

(2)The subsidiaries are coded consecutively beginning from ”1” in the order presented in the table above.
Note 2 ： According to the “Guidelines Governing the Preparation of Financial Reports by Securities Issuers” issued by the R.O.C. Securities and Futures Bureau, receiving parties should be disclosed as one of the following:
(1) A company with which it does business.

(2) A company in which the public company directly and indirectly holds more than 50% of the voting shares.

(3) A company that directly and indirectly holds more than 50 % of the voting shares in the public company.
(4) A company in which the public company holds, directly or indirectly, 90% or more of the voting shares.
(5) A company that fulfills its contractual obligations by providing mutual endorsements/guarantees for another company in the same industry or for joint builders for purposes of undertaking a construction project.
(6) A company that all capital contributing shareholders make endorsements/ guarantees for their jointly invested company in proportion to their shareholding percentages.
(7) Companies in the same industry provide among themselves joint and several security for a performance guarantee of a sales contract for pre-construction homes pursuant to the Consumer Protection Act for each other.
Note 3 ： The endorsements/guarantees amount of the Company toward a single enterprise is limited to 50% of the Company’ s net value in the most recent financial statement; the total amount of endorsement/guarantee made by the Company shall not exceed 100% of the net value in the most recent financial statement.
Note 4 ： The intercompany endorsement guarantee limits for the Company's direct and indirect ownership of 100% of the voting shares are as follows ：

Note 5 ： The guarantees of Nanzong Construction Developments, Co., Ltd. toward its parent company is limited to 4 times of the net value in the most recent financial statement of Nanzong Construction Developments, Co., Ltd..

158

TABLE 3

MARKETABLE SECURITIES HELD

(Amounts in Thousands of New Taiwan Dollars)

Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account		December 31, 2020	December 31, 2020		Note
				Number of Shares	Carrying Value	Percentage of Ownership	Fair Value
NANKANG RUBBER TIRE CORP., LTD.	Stock MILDEF CRETE INC. TAIWAN TELEVISION ENTERPRISE, LTD. TAIWAN FERTILIZER CO., LTD. FEDERAL CORP. SHIHLIN PAPER CORPORATION	`－` `－` `－` `－` `－`	Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss	2,150,829 172,048 6,679,000 93,688,000 588,000	$ 107,434 1,307 362,002 1,845,654 34,868	3.665`％` 0.0613`％` 0.6815`％` 19.793`％` 0.226`％`	$ 107,434 1,307 362,002 1,845,654 34,868

Note ： Excluding subsidiaries,associates and joint ventures.

159

TABLE 4

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL

(Amounts in Thousands of New Taiwan Dollars)

Company Name	Marketable Securities Type and Name	Financial Statement Account	Counterparty	Nature of Relationship	Beginning Balance	Beginning Balance	Acquisition	Acquisition		Disposal	Disposal		Ending Balance	Ending Balance
					Shares	Amount	Shares	Amount (Note 1)	Shares	Amount	Carrying Value	Gain/Loss on Dispoal (Note 2)	Shares	Amount
NANKANG RUBBER TIRE CORP., LTD.	Stork/ FEDERAL CORP.	Financial assets at fair value through profit or loss-current	Centralized securities exchange market	`－`	`－`	$`－`	93,688,000	$ 1,845,654	`－`	`－`	`－`	`－`	93,688,000	$ 1,845,654
NANKANG RUBBER TIRE CORP., LTD.	Stock/ TAIWAN FERTILIZER CO., LTD.	Financial assets at fair value through profit or loss-current	Centralized securities exchange market	`－`	`－`	$`－`	12,192,000	$ 616,246	5,513,000	$ 254,244	$ 254,244	`－`	6,679,000	$ 362,002

Note 1 ： Calculated at fair value.

160

TABLE 5

DISPOSAL OF INDIVIDUAL REAL ESTATE AT PRICES OF AT LEAST NT$300 MILLION OR 20%OF THE PAIK-IN CAPITAL

(Amounts in Thousands of New Taiwan Dollars)

Name of company	Type of property	Transaction date	Acquisition Date (Note 1)	Carrying Amount (Note 1)	Transaction amount	Amount actually receivable (Note 2)	Gain/Loss on Dispoal (Note 1)	Counterparty	Nature of Relationship	Purpose of Disposal	Price Reference
NANZONG CONSTRUCTION DEVELOPMENTS, CO., LTD.	Inventories	January 18, 2020	N/A	N/A	$ 312,680	$ 31,270	N/A	A Company	None	Get business benefits	Real estate valuation report
NANZONG CONSTRUCTION DEVELOPMENTS, CO., LTD.	Inventories	January 2020 to February 2020	N/A	N/A	369,900	36,990	N/A	B Company	None	Get business benefits	Real estate valuation report
NANZONG CONSTRUCTION DEVELOPMENTS, CO., LTD.	Inventories	November 24, 2020	N/A	N/A	327,200	9,610	N/A	C Company	None	Get business benefits	Real estate valuation report

Note 1 ： Inventory sold thus not applicable.

Note 2 ： These are advance on building and land received based on the contract.

161

TABLE 6

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

(Amounts in Thousands of New Taiwan Dollars and Foreign currencies in Thousands)

Company Name	Related Party	Nature of Relationships		Transaction Details	Transaction Details		Details of non-arm’s length transaction	Details of non-arm’s length transaction	Notes and Accounts receivable (payable)	Notes and Accounts receivable (payable)
			Purchases/ Sales	Amount	Percentage of total purchases (sales)	Payment Terms	Unit Price	Payment Terms	Ending Balance	Percentage of total receivables (payable)
NANKANG RUBBER TIRE CORP., LTD.	TAIPEI NANHUNG RUBBER TIRE CORP., LTD.	Subsidiary	Sales	$ 290,361	4.67`％`	6 months	`－`	`－`	$ 65,634	5.96`％`
NANKANG RUBBER TIRE CORP., LTD.	NANGUAN RUBBER TIRE CORP., LTD.	Associates	Sales	112,236	1.80`％`	6 months	`－`	`－`	28,797	2.61`％`
NANKANG INTERNATIONAL CO., LTD.	NANKANG (ZHANGJIAGANG FREE TRADE ZONE) RUBBER INDUSTRY CO., LTD.	Subsidiary	Purchases	USD 79,881	100`％`	6 months	`－`	`－`	USD 47,319	100.00`％`
NANKANG RUBBER TIRE CORP., LTD.	NANKANG (ZHANGJIAGANG FREE TRADE ZONE) RUBBER INDUSTRY CO., LTD.	Indirect subsidiary	Purchases	243,748	7.72`％`	6 months	`－`	`－`	140,042	40.08`％`

162

TABLE 7

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

(Amounts in Thousands of New Taiwan Dollars and Foreign currencies in Thousands)

Company Name	Related Party	Nature of Relationships	Ending Balance	Turnover rate	Overdue receivables	Overdue receivables	Amounts Received in Subsequent Period	Allowance for Bad Debts
					Amount	Action Taken
NANKANG (ZHANGJIAGANG FREE TRADE ZONE) RUBBER INDUSTRY CO., LTD	NANKANG INTERNATIONAL CO.,LTD	Parent company	USD 47,319	`－`	$ `－`	`－`	USD 17,972	$`－`
NANKANG (ZHANGJIAGANG FREE TRADE ZONE) RUBBER INDUSTRY CO., LTD	NANKANG RUBBER TIRE CORP.,LTD	The ultimate parent of the Company	USD 4,917	`－`	`－`	`－`	USD 217	`－`

163

TABLE 8

NAMES, LOCATIONS AND RELATED INFORMATION OF INVESTEES OVER WHICH THE COMPANY EXERCISES

SIGNIFICANT INFLUENCE

(Amounts in Thousands of New Taiwan Dollars and Foreign currencies in Thousands)

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	Balance a	s of December 31, 2020	s of December 31, 2020	Net Income (Losses) of the Investee	Shares of Profits/Losses of Investee	Notes
				December 31, 2020	December 31, 2019	Shares	Percentage of ownership	Carrying value
NANKANG RUBBER TIRE CORP.,LTD	TAIPEI NANHUNG RUBBER TIRE CORP., LTD. NANGUAN RUBBER TIRE CO., LTD. NANZONG CONSTRUCTION DEVELOPMENTS, CO., LTD. NANKANG RUBBER TIRE (SINGAPORE) PTE LTD. NANKANG INTERNATIONAL CO.,LTD. NANKANG TIRE NETHERLANDS B.V. NANKANG YISHENG PROPERTY MANAGEMENT CONSULTANTS CO., LTD.	Taiwan `〃` `〃` Singapore Seychelles Netherlands Taiwan	All kinds of tire transactions `〃` Professional asset management Reinvestment of other businesses and all kinds of tire transactions `〃` Information collection and all kinds of tire transactions Management Consulting	$ 42,000 5,500 3,358,784 USD 27,800 USD 80,780 EUR 60 2,000	$ 42,000 5,500 3,358,784 USD 27,800 USD 80,780 EUR 60 `－`	900,000 549,994 178,500,000 SG 45,982,196 US 80,780,000 EU 600 200,000	100.00 20.37 100.00 100.00 100.00 100.00 40.00	$ 32,091 814,000 3,255,951 1,461,884 4,849,869 39,499 1,998	$ 18,972 (867,111) 2,506 44,149 195,511 14,925 (5)	$ 18,972 (176,632) 2,506 44,149 195,511 14,925 (2)	1 2 2 3

Note 1 ： The amount of cash dividends acquired from Taipei Nanhung Rubber Tire Corp., Ltd. was NT$8,000 thousand.

Note 3 ： Invested in the establishment of Nankang Yisheng Property Management Consulants Co., Ltd. and held 200,000 shares.

164

TABLE 9

INFORMATION ON INVESTMENT IN MAINLAND CHINA

1.[(Amounts in Thousands of New Taiwan Dollars and Foreign currencies in Thousands)]

1.							(Amounts	in Thousands of Ne	w Taiwan Dol	lars and Foreign cu	rrencies in Thousa	nds)
Investee Company	Main Businesses and products	Total Amount of paid-in Capital	Method of Investment	Accumulated Outflow of Investment January 1, 2020	Investment Flows		Accumulated Outflow of Investment from Taiwan as of December 31, 2020	Net income (loss) of investee company	Percentage of Ownership	Shares of profits/Losses (Note 2)	Carrying Amount as of December 31, 2020	Accumulated Inward Remittance of Earnings as of December 31, 2020
					Outflow	Inflow
NANKANG (ZHANGJIAGANG FREE TRADE ZONE) RUBBER INDUSTRY CO., LTD.	Production and sale of various tires	$ 4,089,158 US$ 143,580	Note1	$ 3,661,958 US$ 128,580	$`－`	$`－`	$ 3,661,958 US$ 128,580	$ 183,173 CNY 42,826	100`％`	$ 183,173 US$ 6,204	$ 6,041,491 US$ 212,131	$ 3,371,042 CNY 700,000

Accumulated	Investment in Mainland China as of December 31, 2020			Investment Amounts Authorized by Investment Commission, MOEA					Upper Limit on Investment
	$ 3,661,958 (US$ 128,580)			$ 4,089,158 (US$ 143,580)					$ 6,472,384

Note 1 ： Indirectly investment in Mainland China through the (Nankang International Co., Ltd. and Nankang Rubber Tire (Singapore) Pte. Ltd.) registered in a third region.

Note 2 ： The investment income (loss) recognized in current period adopted the financial statement certificated by the CPA of the parent company in Taiwan.

165

2.

The Company invested resolution	Investment Amounts	Investment Amounts	Investment Amounts (US$ in Thousands)	Indirectly	Investment in Mainland China
	Approved Number	Authorized Amounts (US$ in Thousands)		Investment outflow (US$ in Thousands)	Purpose
NANKANG RUBBER TIRE (SINGAPORE) PTE LTD.	1997/08/21-(86)-86721648	US$ 27,800	US$ 27,800	US$ 27,800	Indirectly investment NANKANG (ZHANGJIAGANG FREE TRADE ZONE) RUBBER INDUSTRY CO., LTD.
NANKANG RUBBER TIRE (SINGAPORE) PTE LTD.	2007/12/26-0606370	US$ 6,950	US$ 6,950 (Note1)	`－`	Indirectly investment NANKANG (ZHANGJIAGANG FREE TRADE ZONE) RUBBER INDUSTRY CO., LTD.
NANKANG INTERNATIONAL CO., LTD.	2005/08/02-093039942	US$ 32,200	US$ 32,200	US$ 32,200	Indirectly investment NANKANG (ZHANGJIAGANG FREE TRADE ZONE) RUBBER INDUSTRY CO., LTD.
NANKANG INTERNATIONAL CO., LTD.	2007/12/26-09600460370	US$ 8,050	US$ 8,050 (Note1)	`－`	Indirectly investment NANKANG (ZHANGJIAGANG FREE TRADE ZONE) RUBBER INDUSTRY CO., LTD.
NANKANG INTERNATIONAL CO., LTD.	2008/02/20-09600472310	US$ 15,000	US$ 15,000	US$ 15,000	Indirectly investment NANKANG (ZHANGJIAGANG FREE TRADE ZONE) RUBBER INDUSTRY CO., LTD.
NANKANG INTERNATIONAL CO., LTD.	2008/12/02-09700377990	US$ 53,580	US$ 53,580 (Note 2)	US$ 53,580 (Note 2)	Indirectly investment NANKANG (ZHANGJIAGANG FREE TRADE ZONE) RUBBER INDUSTRY CO., LTD.

Note 2 ： The claim of the invested company in the third regions, NANKANG INTERNATIONAL CO., LTD. was converted into capital increase.

Major transactions between the invested companies in the Mainland China and the Company occurring directly or indirectly: Table 2, 6, 7, and 8.

166

TABLE 10

INFORMATION ON MAJOR SHAREHOLDERS

Name of major shareholders	Total Shares Owned (In Thousands)	Ownership Percentage
NanGuan Rubber Tire Corp. Ltd.	151,228	18.13`％`
Yuanre Development Co., Ltd.	82,088	9.84`％`
Yuanhung Development Co., Ltd.	82,764	9.92`％`
Zhikai Development Co., Ltd	82,383	9.87`％`

Note 1 ： The major shareholders information was from the data that the Company issued common shares (including treasury shares) and preference shares in dematerialised form which were registered and held by the shareholders above 5% on the last operating date of each quarter and was calculated by Taiwan Depository & Clearing Corporation.

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

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

For the information of reported share equity of insider, please refer to Market Observation Post System.

167

NANKANG RUBBER TIRE CORP., LTD.

THE CONTENTS OF STATEMENTS OF MAJOR

ACCOUNTING ITEMS

(In Thousands of New Taiwan Dollars, Unless Specified Otherwise)

ITEM

STATEMENT INDEX

STATEMENT OF CASH AND CASH EQUIVALENTS
STATEMENT OF FINANCIAL ASSETS AND
LIABILITIES AT FAIR VALUE THROUGH PROFIT
OR LOSS-CURRENT
STATEMENT OF NOTES RECEIVABLE
STATEMENT OF ACCOUNTS RECEIVABLE
STATEMENT OF OTHER RECEIVABLES DUE
FROM RELATED PARTIES
STATEMENT OF INVENTORIES
STATEMENT OF CHANGES IN INVESTMENTS
ACCOUNTED FOR UNDER THE EQUITY
METHOD
STATEMENT OF CHANGES IN COST AND
ACCUMULATED DEPERCIATION OF
PROPERTY, PLANT AND EQUIPMENT
STATEMENT OF CHANGES IN RIGHT-OF-USE
ASSETS
STATEMENT OF CHANGES IN THE COST OF
INVESTMENT REAL ESTATE AND
ACCUMULATED DEPRECIATION
STATEMENT OF DEFERRED INCOME TAX ASSETS
STATEMENT OF SHORT-TERM DEBT
STATEMENT OF SHORT-TERM NOTES AND BILL
PAYABLE
STATEMENT OF NOTES PAYABLE
STATEMENT OF ACCOUNTS PAYABLE
STATEMENT OF LEASE LIABILITIES
STATEMENT OF LONG-TERM BORROWINGS
STATEMENT OF DEFERRED INCOME TAX
LIABILITIES
STATEMENT OF NET OPERATING REVENUES
STATEMENT OF OPERATING COSTS
STATEMENT OF MANUFACTURING EXPENSES
STATEMENT OF SALES AND MARKETING
EXPENSES
STATEMENT OF GENERAL AND
ADMINISTRATIVE EXPENSES
STATEMENT OF RESEARCH AND DEVELOPMENT
EXPENSES
STATEMENT OF OTHER BENEFITS AND LOSSES
STATEMENT OF FINANCE COSTS
STATEMENT OF LABOR, DEPRECIATION AND
AMORIZATION BY FUNCTION

1
2
Note27
3
4
5
6
Note11
Note12
Note 13
Note 24
7
8
9
10
11
Note 18
Note 24
12
13
14
15
16
17
Note23
Note23
Note26

168

STATEMENT OF CASH AND CASH EQUIVALENTS

DECEMBER 31, 2020

		STATEMENT 1
Item	Description	Amount
Cash on hand Checking accounts Demand deposits Foreign currency deposits	USD 320,435.67 EUR 21,715.26 JPY 300,000.00	$ 847 82,604 17,278 9,126 760 83
Total		$ 110,698

Exchange rate US$1=NT$28.48, EUR1=NT$ 35.02, JPY1=NT$0.2763

169

`－` STATEMENT OF FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS CURRENT

DECEMBER 31, 2020

STATEMENT 2

Name of financial assets	Description	Shares	Face value	Total amount	Interest rates	Acquisition cost	Fair Value	Fair Value
							Unit price	Total amount
Mildef Crete Inc. Taiwan Television Enterprise, Ltd. Taiwan Fertilizer Co., Ltd. Federal Corp. Shihlin Paper Corporation	Over-the-counter Stocks Emerging stocks Listed Company Stocks Listed Company Stocks Listed Company Stocks	2,150,829 172,048 6,679,000 93,688,000 588,000	10 10 10 10 10	$ 21,508 1,720 66,790 936,880 5,880	`－` `－` `－` `－` `－`	$ 13,044 332 360,069 1,504,360 34,409	49.95 7.60 54.20 19.70 59.30	$ 107,434 1,307 362,002 1,845,654 34,868
Total						$ 1,912,214		$ 2,351,265

170

STATEMENT OF ACCOUNTS RECEIVABLE,NET

DECEMBER 31, 2020

		STATEMENT 3	STATEMENT 3
Client Name	Description	Amount	Note
Taipei Nanhung Rubber Tire Corp. Ltd. Nanguan Rubber Tire Corp. Ltd. Nankang Tire Netherlands B.V Nankang (Zhangjiagang Free Trade Zone) Rubber Industrial Co., Ltd. Subtotal of related parties TIRECO TIGAR TYRES Others Less`：`Loss allowance Subtotal of non-related parties	USD 19,447.00 USD 41,770.10 USD 10,109,473.00 USD 14,877,258.32 The amount of individual item included in others does not exceed 5% of the account balance.	$ 62,567 26,037 554 1,190
		90,348
		287,918 423,704 294,989 (787)
		1,005,824
Total		$ 1,096,172

Exchange rate ： US$1 ＝ NT$28.48.

171

STATEMENT OF OTHER RECEIVABLES

DECEMBER 31, 2020

		STATEMENT 4	STATEMENT 4
Client Name	Description	Amount	Note
Nankang (Zhangjiagang Free Trade Zone) Rubber Industrial Co., Ltd. Subtotal of related parties Income tax refund receivable. Payment on behalf of others Other Subtotal of non-related parties Total	USD 63,017.78 Payment of shipping charges on behalf of customers and Payment of customs duty on behalf of clients	$ 1,795
		1,795
		33,989 54,287 102
		88,378
		$ 90,173

Exchange rate ： US$1 ＝ NT$28.48

172

STATEMENT OF INVENTORIES

DECEMBER 31, 2020

STATEMENT 5

Item	Description	Amount	Amount
		Cost	Net Realizable Value
Raw materials Work in process Finished goods Inventory in transit	Natural rubber, raw materials, packaging, hardware, electrical materials, etc. Material in process, labor, manufacturing costs Tires Raw materials	$ 367,017 85,113 156,706 110,733	$ 373,590 106,542 221,422 110,733
	Total Less`：`Allowance for Inventory Write-down	719,569 `－`	812,287 `－`
	Net	$ 719,569	$ 812,287

173

STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

FOR THE YEAR ENDED DECEMBER 31, 2020

STATEMENT 6

Investees	Balance, January 1, 2020	Balance, January 1, 2020	Additions Investment	Additions Investment	Decrease	Investment	Balance, December	Balance, December	31, 2020	Mark Net A	et Value or ssets value	Collateral	Note
	Shares	Amount	Shares	Amount	Shares	Amount	Shares	%	Amount	Unit Price (NT$)	Total Amount
Subsidiary`：` Taipei Nanhong Rubber Tire Co., Ltd. Nanzong Construction Developments, Co., Ltd. Nankang Rubber Tire (Singapore) Pte., Ltd. Nankang International Co., Ltd. Nankang Tire Netherlands B.V. Associate`：` Nan Guan Rubber Tire Co., Ltd. Nankang Yisheng Property Management Consultants Co., Ltd.	900,000 178,500,000 SG 45,982,196 US 80,780,000 EU 600 549,994 `－`	$ 19,198 3,253,445 1,498,224 4,920,361 22,031 990,469 `－`	`－` `－` `－` `－` `－` `－` 200,000	$ 20,893 2,506 68,035 253,850 17,468 `－` 2,000	`－` `－` `－` `－` `－` `－` `－`	$ 8,000 `－` 104,375 324,342 `－` 176,469 2	900,000 178,500,000 SG 45,982,196 US 80,780,000 EU 600 549,994 200,000	100`％` 100`％` 100`％` 100`％` 100`％` 20.37`％` 40.00`％`	$ 32,091 3,255,951 1,461,884 4,849,869 39,499 814,000 1,998	41.72 18.24 31.80 60.05 67,750.00 1,481.61 9.99	$ 37,548 3,255,951 1,462,076 4,850,470 40,650 814,877 1,998	None None None None None None None	1 2 3 4
Total		$10,703,728		$ 364,752		$ 613,188			$ 10,455,292		$ 10,463,570

Note 1 ： The amount of cash dividends acquired from Taipei Nanhung Rubber Tire Corp., Ltd. was NT$8,000 thousand.

Note 2 ： The amount of cash dividends acquired from NANKANG RUBBER TIRE (SINGAPORE) PTE., LTD. was NT$104,375 thousand.

Note 3 ： The amount of cash dividends acquired from NANKANG INTERNATIONAL CO., LTD. was NT$324,342 thousand.

Note 4 ： Invested in the establishment of Nankang Yisheng Property Management Consulants Co., Ltd. and held 200,000 shares.

174

STATEMENT OF SHORT-TERM BORROWINGS

DECEMBER 31, 2020

STATEMENT 7

Types	Description	Balance, End of Year	Contract Period	Range of Interest Rates (%)	Loan Commitments	Collateral	Note
Secured borrowings Credit borrowings Letter of credit borrowings Related party loan	Nankang International Co., Ltd.	$ 2,060,000 3,730,000 702,612 569,600	Within 1 year Within 1 year Within 1 year Within 1 year	1.04% ~1.10% 0.45% ~1.10% 0.70% ~ 1.20% `－`	$ 2,400,000 4,970,000 2,610,000 USD 69,000 `－`	Note 1 Note 1
Total		$ 7,062,212

Note1 ： The land and plant of the Hsin-Fung plant and the land of the subsidiaries. Note2 ： Exchange rate US$1 ＝ NT$28.48

STATEMENT OF SHORT-TERM NOTES AND BILLS PAYABLE

DECEMBER 31, 2020

STATEMENT 8

Item	Financial Institution	Contract Period	Interest rate range		Amount
				Issuance amount	Unamortized Amount	Carrying Amount
Commercial Paper	DAH CHNG BILLS FINANCE CORP INTERNATIONAL BILLS FINANCE CORPORATION MEGA BILLS FINANCE CO., LTD. TAIWAN FINANCE CORPORATION GRAND BILLS FINANCE CORPORATION TAIWAN COOPERATIVE BILLS FINANCE CORPORATION THE SHANGHAI COMMERCI AL & SAVINGS BANK, LTD.	2020.12.25`～`2021.03.25 2020.11.24`～`2021.01.22 2020.11.10`～`2021.01.08 2020.11.09`～`2021.02.05 2020.10.22`～`2021.02.25 2020.11.05`～`2021.02.03 2020.12.02`～`2021.01.08	1.058`％` 1.068`％` 1.058`％` 1.098`％` 1.058`％` 1.058`％` 1.000`％`	$ 50,000 50,000 50,000 50,000 80,000 50,000 150,000	$ (120) (31) (10) (53) (96) (48) (29)	$ 49,880 49,969 49,990 49,947 79,904 49,952 149,971
Total				$ 480,000	$ (387)	$ 479,613

STATEMENT OF NOTES PAYABLES

DECEMBER 31, 2020

STATEMENT 9

			STAT
Client Name	Description	Amount	Note
Chiu Lih Plastic Co., Ltd. Evergreen International Corporation Maersk Taiwan Ltd. Ocean Network Express (Taiwan) Co., Ltd. CMA CGM(Taiwan) Ltd. Others	Engineering funds Shipping fee Shipping fee Shipping fee Shipping The amount of individual item included in others does not exceed 5% of the account balance.	$ 2,156 7,391 4,954 1,646 2,074 310
Total		$ 18,531

STATEMENT OF ACCOUNTS PAYABLES

DECEMBER 31, 2020

DECEMBER 31, 2020	DECEMBER 31, 2020	DECEMBER 31, 2020
			STATEMENT10 Note
Client Name	Description	Amount	Note
Nankang (ZhangJiaGang Free Trade Zone) Rubber Industrial Co., Ltd. Subtotal of related parties TSRC Corporation Others Subtotal of non-related parties	Purchase of raw materials (USD 4,917,201.69) Purchase of raw materials The amount of individual item included in others does not exceed 5% of the account balance.	$ 140,042
		140,042
		45,530 145,278
		190,808
Total		$ 330,850

Exchange rate ： US$1 ＝ NT$28.48

STATEMENT OF OTHER PAYABLES

DECEMBER 31, 2020

		STATEMENT 11 Amount Note $ 719 719 118,318 20,339 27,231 27,204 26,009 21,570 127,736 368,407 $ 369,126	STATEMENT 11 Amount Note $ 719 719 118,318 20,339 27,231 27,204 26,009 21,570 127,736 368,407 $ 369,126
Item	Description	Amount	Note
Nankang Tire Netherlands B.V. Subtotal of related parties Wages and salaries payable Compensated absences Payable on machinery and equipment Advertisement payable Freight charge payable Material payable Others Subtotal of non-related parties	Sample tire (EUR 20,532.35) Includes salary, overtime and bonuses The amount of individual item included in others does not exceed 5% of the account balance.	$ 719
		719
		118,318 20,339 27,231 27,204 26,009 21,570 127,736
		368,407
Total		$ 369,126

Exchange rate ： EUR$1 ＝ NT$35.02

STATEMENT OF NET OPERATING REVENUES

FOR THE YEAR ENDED DECEMBER 31, 2020

		STATEMENT 12 Note
Shipments (Piece)	Amount	Note
5,397,086 56,321	$ 6,192,230 26,086
5,453,407	$ 6,218,316

STATEMENT OF OPERATING COSTS

FOR THE YEAR ENDED DECEMBER 31, 2020

STATEMENT 13

Item	Amount	Amount
	Subtotal	Total
Cost of sales for the external purchased goods Beginning inventory Add`：`Net purchase Ending inventory Cost of goods sold Cost of sales for the self-manufactured product Materials used during the period Balance, beginning of year Add`：`Raw material purchased Less`：`Raw materials, end of year Transfer to indirect materials Materials sold Transfer to self use Direct labor Manufacturing expenses Manufacturing cost Add`：`Work in process, beginning of year Less`：`Work in process, end of year Transfer to self use Cost of finished goods Finished goods, beginning of year Add`：`Finished goods purchased Gain on physical of finished goods Less`：`Finished goods, end of year Compensation tire finished goods , Transfer to self-use self use finished goods Loss on physical of finished goods Scrapping of finished goods Costs of production and sales of goods Add`：`Scrapping of inventory Less`：`Revenue from sales of scraps Gain on physical inventory Total	$ `－` 231,616 `－` `－`	$ 231,616 2,717,732 670,270 1,269,581
	378,172 2,925,798 (367,017) (181,858) (7,300) (30,063)

		4,657,583 112,318 (85,112) (53,220)
		4,631,569 80,225 17,794 1,056 (156,706) (1,734) (696) (10,027)
		4,561,481 10,027 (3,936) (360)
		$ 4,798,828

STATEMENT OF MANUFACTURING EXPENSES

FOR THE YEAR ENDED DECEMBER 31, 2020

STATEMENT 14

			STATE
Item	Description	Amount	Note
Indirect labor Indirect materials Utilities expense Depreciation Others expenses	The amount of individual item included in others does not exceed 5% of the account balance.	$ 165,730 181,858 163,988 475,658 282,347
Total		$ 1,269,581

STATEMENT OF SALES AND MARKETING EXPENSES

FOR THE YEAR ENDED DECEMBER 31, 2020

STATEMENT 15

			STATE
Item	Description	Amount	Note
Wages and salaries Freight Advertisement expense Taxes Export expense Packing expenses Others expenses	The amount of individual item included in others does not exceed 5% of the account balance.	$ 46,379 154,223 37,931 46,163 27,146 40,398 46,622
Total		$ 398,862

STATEMENT OF GENERAL AND ADMINISTRATIVE EXPENSES

FOR THE YEAR ENDED DECEMBER 31, 2020

STATEMENT 16

			STATE
Item	Description	Amount	Note
Wages and salaries Depreciation Insurance expense Professional service fees Others expenses	The amount of individual item included in others does not exceed 5% of the account balance.	$ 198,557 23,352 17,178 16,387 68,799
Total		$ 324,273

STATEMENT OF RESEARCH AND DEVELOPMENT EXPENSES

FOR THE YEAR ENDED DECEMBER 31, 2020

STATEMENT 17

			STATE
Item	Description	Amount	Note
Wages and salaries Depreciation Experimental expense Others expenses	The amount of individual item included in others does not exceed 5% of the account balance.	$ 47,972 12,237 25,535 8,702
Total		$ 94,446

The Company should disclose the financial impact to the Company if the Company and its affiliated companies have incurred any financial or cash flow difficulties in 2020 and as of the date of this Annual Report: None.

VI.Review of Financial Conditions, Operating Results, and Risk Management

Financial Performance
(1) Consolidated

Unit: NT$ thousand

			Difference	Difference
item	2020	2019			Remarks
			Amount	%

Current Assets	22,265,066	17,674,856	4,590,210	25.97	(1)
Fixed Assets	8,278,421	8,283,229	(4,808)	(0.06)
Intangible Assets	2,348	2,327	21	0.90
Other Assets	1,479,305	1,681,879	(202,574)	(12.04)
Total Assets	32,025,140	27,642,291	4,382,849	15.86
Current Liabilities	15,119,094	15,514,211	(395,117)	(2.55)
Long-term Liabilities	6,118,739	1,419,189	4,699,550	331.14	(2)
Total Liabilities	21,237,833	16,933,400	4,304,433	25.42	(2)
Capital stock	8,339,349	8,339,349	--	--
Capital surplus	18,970	18,970	--	--
Retained Earnings	3,196,579	3,230,109	(33,530)	(1.04)
Other Adjustments	(767,591)	(879,537)	111,946	12.73
Total Stockholders' Equity	10,787,307	10,708,891	78,416	0.73

1. Analysis of changes in financial ratios:

(1) Current assets: Financial assets measured at fair value by the parent company through profit and loss in 2020-current increases by NT$2,248,067,000 compared with 2019 The construction project increased by NT$1,654,585,000, resulting in an increase of 25.97% in current assets;
(2) Non-current liabilities and total liabilities: In 2020, the subsidiary Nanrong Development Construction Co., Ltd. will increase long-term loans of NT$4,928,435,000, increasing the total non-current liabilities and liabilities;

2. Review and analysis of major capital expenditures and their sources of funds

(1) The use of major capital expenditures and sources of funds: None.
(2) Expected benefits: None.

(2) Parents Only

(2) Parents	Only
			Unit: NT$ thousand
			Difference
item	2020	2019			Remarks
			Amount	%

Current Assets	4,419,833	2,622,500	1,797,333	68.54	(1)
Fixed Assets	5,963,161	6,008,333	(45,172)	(0.75)
Intangible Assets	--	--	--	--
Other Assets	10,929,397	11,273,435	(344,038)	(3.05)
Total Assets	21,312,391	19,904,268	1,408,123	7.07
Current Liabilities	9,433,007	7,874,439	1,558,568	19.79
Long-term Liabilities	1,092,077	1,320,938	(228,861)	(17.33)
Total Liabilities	10,525,084	9,195,377	1,329,707	14.46
Capital stock	8,339,349	8,339,349	--	--
Capital surplus	18,970	18,970	--	--
Retained Earnings	3,196,579	3,230,109	(33,530)	(1.04)
Other Adjustments	(767,591)	(879,537)	111,946	12.73
Total Stockholders' Equity	10,787,307	10,708,891	78,416	0.73

1..Analysis of changes in financial ratios::
(1) Current assets: Financial assets measured at fair value through profit and loss in 2020-current increases by NT$2,248,067,000 compared with 2019, resulting in a substantial increase in current assets.
2.Review and analysis of major capital expenditures and their sources of funds
(1) The use of major capital expenditures and sources of funds: None.
(2) Expected benefits: None.

2. Analysis of Financial Performance

(1) Consolidated

2. Analysis of Financial Performance (1) Consolidated	2. Analysis of Financial Performance (1) Consolidated	2. Analysis of Financial Performance (1) Consolidated	2. Analysis of Financial Performance (1) Consolidated	2. Analysis of Financial Performance (1) Consolidated	2. Analysis of Financial Performance (1) Consolidated
Unit: NT$ thousand
item	2020	2019	difference	%	Remarks
Gross Sales	9,695,119	11,111,580	(1,416,461)	(12.75)
Less: Sales Returns	(7,364,738)	(9,053,695)	1,688,957	18.65
Sales Allowances	2,330,381	2,057,885	272,496	13.24
Net Sales	163	(377)	540	143.24
Cost of Sales	(1,301,454)	(1,342,803)	41,349	3.08
Gross Profit	--	--	--	--
OperatingExpenses	1,029,090	714,705	314,385	43.99	(1)
OperatingIncome	91,995	620,498	(528,503)	(85.17)	(2)
Non-operating Income and Gains	1,121,085	1,335,203	(214,118)	(16.04)
Non-operating Expenses and Losses	(276,707)	(199,519)	(77,188)
				(38.69)	(3)

Income Before Tax	844,378	1,135,684	(291,306)	(25.65)	(4)
Tax Benefit (Expense)	116,512	(239,411)	355,923	148.67	(5)
Cumulative Effect of Change in AccountingPrinciples	960,890	896,273	64,617	7.21
Analysis of changes in financial ratios: (1)Operating profit: In 2020 due to the impact of international epidemic factors unfavorable trade exports In
, , . 2020, except for Taiwan’s domestic market growth of 7.02%, the revenue of export exports on all continents will decline. Although the overall operating income has decreased by 12.75%, Because the operating cost ratio in 2020 decreased by 5.52% compared with 2019 (the price of raw materials such as natural rubber in 2020 was cheaper than in 2019 years) and the expense cost ratio remained the same in both years, the favorable change in operating profit in 2020 reached 43.99%. (2) Net non-operating income and expenses: Mainly due to the unfavorable increase of NT$158,678,000 in foreign currency exchange losses in the year 2020 compared to the year 2019, and the financial asset liability evaluation income measured by the profit and loss at fair value increased by NT$402,760,000 in the year 2020 compared with the year 2019 The share of profits and losses of subsidiaries, affiliates, and joint ventures that adopt the equity method in 2020 has unfavorably increased by NT$785,494,000 compared with that in 2019, resulting in significant changes in net non- operating income and expenses. (3) Income tax expense: Mainly because the income tax expense of the parent company in 2020 increased by NT$78,814,000 compared with that in 2019, the unfavorable change in income tax expense reached 38.69%. (4) Net profit for the current period: In summary, the net profit before tax in 2020 decreased by NT$214,118,000 and the income tax expense was unfavorable NT$77,188,000 compared with that in 2019, resulting in an unfavorable change in net profit for the period by 25.65%. (5) Other comprehensive gains and losses: Mainly because the conversion difference in the financial statements of foreign operating institutions in 2020 increased by NT$353,410,000 compared with that in 2019, resulting in a change in other comprehensive gains and losses of 148.67%.

Parents Only

Parents Only	Parents Only	Parents Only	Parents Only	Parents Only	Parents Only
Unit: NT$ thousand
item	2020	2019	difference	%	Remarks
Gross Sales	6,218,316	6,821,212	(602,896)	(8.84)
Less: Sales Returns	(4,798,828)	(5,512,322)	713,494	12.94
Sales Allowances	1,419,488	1,308,890	110,598	8.45	(1)
Net Sales	2,730	(2,684)	5,414	201.71
Cost of Sales	(818,076)	(858,523)	40,447	4.71
Gross Profit	--	--	--	--
OperatingExpenses	604,142	447,683	156,459	34.95	(1)
OperatingIncome	457,759	826,710	(368,951)	(44.63)	(2)
Non-operating Income and Gains	1,061,901	1,274,393	(212,492)	(16.67)	(3)
Non-operating Expenses and Losses	(217,523)	(138,709)	(78,814)
				(56.82)	(3)

Income Before Tax	844,378	1,135,684	(291,306)	(25.65)	(3)
Tax Benefit (Expense)	116,512	(239,411)	355,923	148.67	(4)
Cumulative Effect of Change in AccountingPrinciples	960,890	896,273	64,617	7.21	(3)
Analysis of changes in financial ratios：
(1) Operating profit: In 2020, due to the impact of the international epidemic, trade exports were unfavorable. Except for the slight growth of Taiwan's domestic market in 2020, the revenue of export exports on all continents was declining. Although the overall operating income decreased by 8.84%, it was due to The operating cost ratio in 2020 was reduced by 3.64% compared with that in 2008 (the price of raw materials such as natural rubber in 2020 was lower than that in 2019) and the expense cost ratio remained the same in both years, resulting in a favorable change in operating profit in 2020 by 34.95%. (2) Net non-operating income and expenses: Mainly due to the financial assets and liabilities evaluation income measured by fair value through profit and loss, an increase of NT$402,740,000 in 2020 compared with 2019, the share of the equity method of subsidiaries, affiliates and joint ventures In 2020, compared with 2019, an unfavorable increase of NT $711,746,000, caused an unfavorable increase of 44.63% in net non-operating income and expenses. (3) Income tax expenses: Mainly due to the decrease in the deductions of investment losses and easy income tax deductions recognized under the equity method in 2020 compared with that in 2019 years, resulting in an unfavorable change in income tax expenses of 56.82%. (4) Net profit for the current period: In summary, the pre-tax net profit in 2020 was reduced by NT$212,492,000 and the income tax expense was unfavorable NT$78,814,000 compared with that in 2019, resulting in an unfavorable change in net profit for the period by 25.65%. (5) Other comprehensive gains and losses: Mainly because the conversion difference in the financial statements of foreign operating institutions in 2020 increased by NT$353,410,000 compared with that in 2019,resultingin achangeinothercomprehensive gainsandlosses of 148.67%.

3. Analysis of Cash Flow

(1) Cash Flow Analysis for the Current Year

1.Consolidated

Year
	December 31, 2020	December 31, 2019	difference
item

Cash flow ratio (%)	9.11	27.48	(66.85)
Cash Flow Adequacy Ratio (%)	82.85	71.21	16.35
Cash Flow Reinvestment Ratio (%)	1.59	14.37	(88.94)
Analysis of deviation of 2020 vs. 2019 over 20%: The net cash inflow from operating activities in 2020 decreased by NT$2,885,828,000 compared with 2019 (the construction in progress and contract liabilities of Nanrong Development Construction increased by NT$1,462,202,000 and decreased by NT$2,023,647,000 respectively compared with 2019), resulting in a decrease in cash flow and cash flow fair ratio. Increase the allowable ratio of cash flow.

2.Parent Only

Year	December 31,
		December 31, 2019	difference
Item	2020

Cash flow ratio (%)	14.80	8.02	84.54
Cash Flow Adequacy Ratio (%)	46.35	41.82	10.83
Cash Flow Reinvestment Ratio (%)	2.12	0.28	657.14
Analysis of deviation of 2020 vs. 2019 over 20%: Net cash inflow from operating activities in 2020 will increase by NT$764,982,000 compared with 2019. Current liabilities in 2020 will increase by NT$1,558,568,000 compared with 2019, resulting in an increase in the ratio related to the cash flow rate in 2020.

Cash Flow Projection for Next Year:

1.Consolidated

Estimated	Estimated Net			Leverage of Cash Surplus	Leverage of Cash Surplus
Cash and Cash	Cash Flow	Estimated		(Deficit)
			Cash Surplus
Equivalents,	from	Cash Outflow
			(Deficit)
Beginning of	Operating	(Inflow)		Investment	Financing
			(1)+(2)-(3)
Year	Activities	(3)		Plans	Plans

(1)	(2)
3,972,357	3,100,000	(3,350,357)	3,722,000	－	－
1. Analysis of changes in cash flow this year (1) Operating Activities: Increase in net profit. (2) Investment activity：Increase equipment investment. (3) Fundraising：Repay part of the loan and pay dividends. 2.Leverage of Cash Surplus: None.

2.Parents Only

Estimated	Estimated Net			Leverage of Cash Surplus	Leverage of Cash Surplus
Cash and Cash	Cash Flow	Estimated		(Deficit)
			Cash Surplus
Equivalents,	from	Cash Outflow
			(Deficit)
Beginning of	Operating	(Inflow)		Investment	Financing
			(1)+(2)-(3)
Year	Activities	(3)		Plans	Plans

(1)	(2)
110,698	2,100,000	(2,080,698)	130,000	－	－
1. Analysis of changes in cash flow this year: (1) Operating Activities: Increase in net profit. (2) Investment activity：Increase equipment investment. (3) Fundraising：Repay part of the loan and pay dividends. 2. Leverage of Cash Surplus: None.

4. Recent Years Major Capital Expenditures and Impact on Financial and

Business: None.

5. Long-term Equity Investment Policy and Results: None

6. Analysis of Risk Management

(1)The impact of interest rate, exchange rate changes, and inflation on the company's profit and loss and future countermeasures ：

Interest rate and inflation: The company is financially sound. With regard to bank borrowing rates, it strengthens contacts with banks and collects relevant financial

  - information to understand interest rate trends and strive for the most favorable borrowing rate. In addition, in the use of short-term idle funds, low-risk bank deposits, financial bonds and funds are the investment objects, so the increase or decrease in interest rates and currency has little impact on the company’s profit and loss.

Exchange rate: Nangang Tire products are mainly exported to European and American countries. Most of the export products are denominated in US dollars and Euros. Therefore, any significant exchange rate changes are closely related to the company’s exchange gains and losses. Therefore, Nangang Tire prudently engages in forward foreign exchange contracts and avoids risks. For the purpose, to appropriately control the gains and losses caused by exchange rate changes within the minimum range.
(2) In recent years, the policy of engaging in high-risk, high-leverage investment, fund lending to others, endorsement, and derivative financial product transactions, the main reasons for profit or loss and future countermeasures: Nangang Tire’s financial management is prudent and does not engage in high Risky, highly leveraged investment. For capital loans to others, endorsement guarantees and derivative financial products, the company has formulated complete policies and internal control procedures. Nangang Tire’s derivative commodity trading contracts are hedging in nature and are managed according to the company’s system and are regularly evaluated. The profit or loss due to 。
exchange rate changes will roughly offset the profits and losses of the hedged project.
(3) Future R&D plans and estimated R&D expenses ：
New product development plan ：

item	Schedule	Estimated time to market
Development of rain tires for racetracks	1.Development of new carcass compound 2.Research on carcass structure	2021.12.31
European label (RRC, Wet) double A-level summer tire product development	1. New pattern development and design 2. New structure development research	2021.5.31
European label Wet A and RRC B all-weather tires research and development	1. New pattern development and design 2. New structure development research	2021.5.31
Development of European label Wet A-class and RRC B-class electric tires	1. New pattern development and design	2021.8.31
Development of the new generation snow tire AW- 1 in Japan	1. New material development research 2. New pattern development and design	2021.8.31

R&D expenses: It is estimated that the R&D investment expenses in 2021 will be 3%~5% of the current year's revenue to ensure R&D competitiveness.
(4) The impact of important domestic and foreign policy and legal changes on the company's financial business and corresponding measures: At the end of 2020, the US Department of Commerce conducted a double-reverse investigation on four Asian countries (Thailand, Vietnam, South Korea, and Taiwan), and the initial tax rate is not conducive to Taiwanese businesses In addition to actively submitting appeals related to production and sales information, Nangang Tire also strives to reduce the impact by adjusting production capacity and actively developing new markets. Although the new crown pneumonia incident has severely hit the automobile manufacturing industry and its related industries, it does not affect the trend of electric vehicles to replace fuel vehicles in various markets. In response to the rising demand for electric tires, Nangang Tire will carry out new product research and development and production capacity planning as soon as possible to maintain market competitiveness 。
(5) Risks Associated with Changes in Technology and Industry: None 。
(6) Changes in Corporate Reputation and Impact on Company’s Crisis Management: None.
(7) Risks Associated with Mergers and Acquisitions.
(8) Expected benefits and possible risks of the expansion of the plant and corresponding measures: In response to the impact of the epidemic and the double-anti policy, Nangang has gradually replaced the old machines with new smart machines in terms of improving the production process. Currently, the molding machines and some fetal teeth machines have been replaced, Which can reduce labor by about 30% and effectively increase production capacity.
(9) Risks and countermeasures for purchase or sales concentration ：
In terms of procurement, the material department should seek long-term contracts with multiple manufacturers for natural rubber, and increase raw material suppliers in the mainland for cord fabrics, carbon black and various other raw materials 。
For the sales part, in order to avoid the risk of excessively concentrated sales in a single market, the company actively expands into emerging markets (such as Indonesia, India, Vietnam), while continuing to expand the two major markets in Japan and Europe 。
(10) Directors, supervisors, or major shareholders holding more than 10% of the shares, the impact and risk of a large number of transfers or replacements of equity on the company and the corresponding measures: noneRisks Associated with Change in Management: None.
(11) Risks Associated with Litigious and Non-litigio: After Nangang Tire’s inventory, it was also found that Vice President Hu was requesting illegal rebates from the manufacturer. Nangang Tire has now appointed a lawyer to file a criminal complaint against Vice President Hu at the Criminal Police Department of the Police Department of the Ministry of the Interior. The case is now in Taipei. Investigation by the District Prosecutor's Office 。
(12) Information security risk assessment analysis and corresponding measures ：
1. The impact of information system damage on the company's business and countermeasures:
  - The company's information system architecture establishes a high-availability
  - dual-host, remote backup and data backup mechanism based on its risk level to ensure uninterrupted services. The backup media is sent to remote storage for storage, and

various simulation tests and emergency response in the computer room are strengthened. The drill is to ensure the normal operation of the information system and the preservation of information, which can reduce the risk of system interruption caused by unwarned natural disasters and man-made negligence, and ensure that the expected time for system recovery is met. In order to smoothly resume business as soon as possible when information system damage occurs, and reduce possible losses and risks, we conduct regular annual operation impact analysis and plan and design and upgrade appropriate software and hardware equipment resources and improve operating procedures based on risk levels. Measures.

Nangang Tire has no major cyber attacks or information security incidents in recent years 。

(13) Environmental risk assessment analysis and countermeasures ：

The raw materials and chemical materials used by Nangang Tire are subject to international environmental protection, climate change, safety and health and other relevant laws and regulations. The measures currently taken by Nangang Tire are as follows:
(1) nternational environmental risks:

Nangang Tire promises not to use conflict minerals. The metal materials used (such as steel wire, belt... etc.) will not accept primary minerals from the Congo and neighboring conflict countries in Central Africa to ensure that the metal used is not Mined from mining areas controlled by armed groups in the Democratic Republic of the Congo and its neighboring countries, upstream suppliers are also investigated and traced to the source of the primary minerals contained in all products, and upstream suppliers are required to prohibit the use of the aforementioned "conflict minerals" 。

(2) Climate regulation risks:

Countries around the world have become more strict with regard to greenhouse gas emissions. Since 2017, Nangang Tire has conducted greenhouse gas inventory and declared emissions, replaced oil-fired boilers with gas-fired boilers, and actively controlled the sources of greenhouse gas pollution in the Xinfeng plant. And actively pay attention to changes in domestic and foreign regulations.

(3) Climate disaster risk

The abnormal climate caused by the global greenhouse effect has exacerbated the crises of wind disasters, floods, droughts, and water shortages, and has a huge impact on the sales and supply chain of Nangang tires. In order to ensure a stable supply of tap water and electricity, in addition to requiring the company's internal and supplier factories to implement carbon and water-saving measures, it also actively holds meetings with power companies and water companies to jointly solve short-term supply and deployment issues 。

Nangang Tire has not been affected by environmental risks in recent years.

7. Other important matters:None

VII.Special Disclosure

1. Subsidiaries

(1) Nankang Subsidiaries Chart

==> picture [563 x 225] intentionally omitted <==

(2) Nankang Rubber Tire Subsidiaries

Unit:NT thousands

	Date of
Company	Incorporati	Place of Registration	Capital Stock	Business Activities
	on
Nankang Rubber Tire (Singapore) Pte. Ltd.	07/01/1997	No.10 Anson Road #33-17, international Plaza, Singapore 079903	USD 27,800	Reinvested in mainland China, buying and selling tires for automobiles and motorcycles
Nankang (ZhangJiaGang Free Trade Zone) Rubber Industrial Co.Ltd.	09,03,1997	Zhangjiagang Free Trade Zone, Jiangsu Province, China	USD 143,580	Production and sales of all- steel, semi-steel tires, lining belts and other rubber products
Nankang International Co.Ltd	06,02,2004	No. 4, Franky Building Providence Industrial Estate,Mahe,Seychelles	USD 80,780	Reinvested in China, buying and selling automobile tires
Taipei NanHung Rubber Tire Corp. Ltd.	04,27,1993	Rm. 608, 6F., No.136, Sec. 3, Ren'ai Rd., Da’an Dist., Taipei City 106465, Taiwan (R.O.C.)	NTD 9,000	Agent distribution and import and export business of various tires, agent distribution of autoparts
NanGuan Rubber Tire Corp. Ltd.	83.11.15	Rm. 608, 6F., No.136, Sec. 3, Ren'ai Rd., Da’an Dist., Taipei City 106465, Taiwan (R.O.C.)	NTD 27,000	Sale and import and export of various tires and agent distribution of domestic and foreign products in the preceding paragraph
Nanzong Construction Developments, Co., Ltd.	84.11.21	Rm. 608, 6F., No.136, Sec. 3, Ren'ai Rd., Da’an Dist., Taipei City 106465, Taiwan (R.O.C.)	NTD 1,785,000	All kinds of tire trading business, import and export business and professional asset management development
Nankang Tire Netherlands B.V	98.12.16	Parkweg 2,2585JJ ‘s-Gravenhage	EUR 60	Information collection and various tire trading
Nankang Yi-Sheng property management Co., Ltd	109.5.28	12F.-1, No.38, Xinguang Rd., Lingya Dist., Kaohsiung City 802626, Taiwan (R.O.C.)	NTD 5,000	Management Consulting Industry

Shareholders in Common of Nankang Rubber tire and Its Subsidiaries with Deemed Control and Subordination: None

Rosters of Directors, Supervisors, and Presidents of Nankang’s Subsidiaries


			Shareholding

Company	Title	Name
				%
			Shares (Investment
				(Investment
			Amount)
				Holding %)

Nankang Rubber Tire (Singapore) Pte. Ltd.	Director Director	Nankang Rubber Tire Corp. Ltd. Representative: Lai, Qiu-Gui Nankang Rubber Tire Corp. Ltd. Representative: Lin,Jun-Ying	SGD45,982,196	100.00%
Nankang (ZhangJiaGang Free Trade Zone) Rubber Industrial Co.Ltd.	Chairman Director Director Director Director Director	Nankang Rubber Tire (Singapore) Pte. Ltd. Representative: Zhang, Chang-Ping Nankang Rubber Tire (Singapore) Pte. Ltd. Representative: Lai, Qiu-Gui Nankang Rubber Tire (Singapore) Pte. Ltd. Representative: Wu, Yuan-Sheng Nankang International Co.Ltd Representative: Lin, Jun-Ying Nankang International Co.Ltd Representative: Wang, Zhong-Zheng Nankang International Co.Ltd Representative: Liu,Chun-Liang	US$143,580,000	100.00%
Nankang International Co.Ltd	Chairman	Nankang Rubber Tire Corp. Ltd. Representative: Lai, Qiu-Gui	US$80,780,000	100.00%
Taipei NanHung Rubber Tire Corp. Ltd.	Chairman Director Director Director Superviser	Nankang Rubber Tire Corp. Ltd. Representative: Zhang, Chang-Ping Nankang Rubber Tire Corp. Ltd. Representative: Lin, Jun-Ming Nankang Rubber Tire Corp. Ltd. Representative: Wu, Min-Zhen Nankang Rubber Tire Corp. Ltd. Representative: Zhuo, Yu-Teng Nankang Rubber Tire Corp. Ltd. Representative: Lin,Jun-Ying	900,000	100.00%
NanGuan Rubber Tire Corp. Ltd.	Chairman Director Director Superviser	Nankang Rubber Tire Corp. Ltd. Representative: Zhang, Yue-Yi Lin, Jun-Ying Dai, Zheng-Hao Li,Jia-Zhang	549,994	20.37%
Nanzong Construction Developments, Co., Ltd.	Chairman Director Director Director Director Supervisor	Nankang Rubber Tire Corp. Ltd. Representative: Zhang, Chang-Ping Nankang Rubber Tire Corp. Ltd. Representative: Lin, Jun-Ming Nankang Rubber Tire Corp. Ltd. Representative: Lin, Jun-Ying Nankang Rubber Tire Corp. Ltd. Representative: Xie, Man-Li Nankang Rubber Tire Corp. Ltd. Representative: Liu, Chun-Liang Nankang Rubber Tire Corp. Ltd. Representative: Jiang, Qing-Xing	178,500,000	100.00%
Nankang Tire Netherlands B.V	Chairman	Yang, Shi-Xian	EUR$60,000	100.00%

	Nankang Yi-Sheng property management Co., Ltd	Chairman Director Director Director Director Supervisor Supervisor	Yi-Sheng Property Management Co., Ltd Representative: Huang, Ping-Zhang Yi-Sheng Property Management Co., Ltd Representative: Huang, Jun-Rui Yi-Sheng Property Management Co., Ltd Representative: Huang, Jun-Ya Nankang Rubber Tire Corp. Ltd. Representative: Chen, Hui-Xiong Nankang Rubber Tire Corp. Ltd. Representative: Cao, Shu-Wen LIN, MEI-HUI HONG,YI-ZHI	500,000	40.00%

Operational Highlights of Nankang Subsidiaries

unit: NT thousands As of 12/31/2020

								Basic
						Income
							Net Income	Earning
Company	Capital Stock	Assets	Liabilities	Net Worth	Net Revenue	(Loss) from
							(Loss	(Loss) Per
						Operatio
								Share

Nankang Rubber Tire (Singapore) Pte. Ltd.	791,744	1,462,076	-	1,462,076	-	(2)	42,754	1.54
Nankang (ZhangJiaGang Free Trade Zone) Rubber Industrial Co.Ltd.	4,842,787	6,944,589	903,104	6,041,485	3,431,566	395,218	186,930	0.17
Nankang International Co.Ltd	2,870,214	6,381,625	1,531,155	4,850,470	2,495,161	8,128	188,636	1.87
Taipei NanHung Rubber Tire Corp. Ltd.	9,000	125,596	88,048	37,548	384,582	22,755	18,972	21.08
NanGuan Rubber Tire Corp. Ltd.	27,000	6,425,059	2,424,712	4,000,347	152,049	3,172	(867,111)	(321.15)
Nanzong Construction Developments, Co., Ltd.	1,785,000	13,558,510	10,302,558	3,255,951	-	(1,386)	2,506	0.01
Nankang Tire Netherlands B.V	2,101	52,633	11,983	40,650	80,780	18,475	15,808	263.47
Nankang Yi-Sheng property management Co., Ltd	5,000	4,995	-	4,995	-	(10)	(5)	(0.01)

Private Placement Securities in 2020 and as of the Date of this Annual Report: None.
Status of Nankang Rubber Tire Common Shares and ADRs Acquired, Disposed of, and Held by Subsidiaries: None. 。
Other Necessary Supplement: None.

VIII.Any Events in 2020 and as of the Date of this Annual Report that Had Material Impacts on Shareholders’Interests or Securities Prices as Stated in Item 3 Paragraph 2 of Article 36 of 。 Securities and Exchange Law of Taiwan: None

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Nankang Rubber Tire CORP., LTD.

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Chairman: Zhang, Chang-Ping

198

AI assistant

NK — Annual Report 2020

51967_rns_2021-07-02_4de90c0f-4c3a-473a-bc24-aa66af25c703.pdf

Nankang Rubber Tire CORP., LTD.

2020 Annual Report

Notice to readers

I. Letter to Shareholders

Operating Performance in 2020 ：

(3) Financial income and expenditure and profitability analysis ：

Business objectives ：

Development Strategy ：

The Impact of the External Competitive Environment, Regulatory Environment, and Macroeconomic Conditions ：

II. Company Profile

2.1 Date of Incorporation: February 20, 1959

2.2 Company History

III.Corporate Governance Report

3.1 Organization

3.1.1 Organizational Chart

3.1.2 Major Corporate Functions

3.2 Directors, Supervisors and Management Team

3.2.1 Directors and Supervisors

Major shareholders of the institutional shareholders

Professional qualifications and independence analysis of directors and supervisors ：

3.2.2 Management Team

3.2.3 Remuneration of Directors, Supervisors, President, and Vice President

Remuneration of Directors

Remuneration of the President and Vice President

Unit: NT$ dollars

Remuneration of Top Five Employees

Employees’ Profit Sharing Paid to Management Team

3.2.4 Comparison of Remuneration for Directors, Supervisors, Presidents and Vice Presidents in the Most Recent Two Fiscal Years and Remuneration Policy for Directors, Supervisors, Presidents and Vice Presidents 。

3.3 Implementation of Corporate Governance

3.3.1 Board of Directors ：

status is as follows. ：

1. Board of Directors’ Performance Evaluation Implementation Status

3.3.2 Corporate Governance Officer

3.3.3 Audit Committee ：

1. Function ：

˙Review financial reports

˙Assess the effectiveness of the internal control system

˙Appointment of CPAs

3.3.4 Compensation Committee ：

1.Compensation Committee Members’ Professional Qualifications and Independence Analysis ：

2.Attendance of Members at Remuneration Committee Meetings ：

Social Responsibility Implementation Status as Required by the Taiwan Financial Supervisory Commission:

Taiwan Corporate Conduct and Ethics Implementation as Required by the Taiwan Financial SupervisoryCommission

Internal Control System Execution Status

1.Statement of Internal Control System

Nankang Rubber Tire Corp., Ltd. Statement of Internal Control System

Major Decisions of Shareholders’ Meeting and Board Meetings

2.Major Resolutions of Board Meetings

Independence

Audit Fee

四、 Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders

五、 Relationship among the Top Ten Shareholders

六、 Investment Ownership

III.Capital Overview

1. Capital and Shares

(1) Capitalization

Composition of Shareholders

Composition of Shareholders

Distribution of Shareholding

Market Price, Net Worth, Earnings, and Dividends Per Common Share

Dividend Policy and Distribution of Earnings ：

Buyback of Common Stock

1.Buyback of Common Stock

IV.Operational Highlights

1. Business Activities

(1) Business Scope

Industry Overview

Technology and R&D Overview

Long-term and Short-term Development

2. Market and Sales Overview

(2)Main products and production process

Supply status of main raw materials:

Major Suppliers and Clients

1. Major Suppliers in the Last Two Calendar Years

2. Major Clients in the Last Two Calendar Years

Production in the Last Two Years

1.Nankang Only

NK Annual Report 2020

`1.` Board of Directors’ Performance Evaluation Implementation Status

`1.` Function ：