TFC — Audit Report / Information 2020

Nov 12, 2020

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Stock Code:1722

TAIWAN FERTILIZER CO., LTD.

Parent Company Only Financial Statements

With Independent Auditors’ Report For the Years Ended December 31, 2020 and 2019

Address: 6F, No.88, Nanjing E. Rd., Sec 2, Taipei City 10457, Taiwan Telephone: (02)2542-2231

The independent 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 independent auditors’ report and parent company only financial statements, the Chinese version shall prevail.

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Table of contents

Contents 1. Cover Page 2. Table of Contents 3. Independent Auditors’ Report 4. Balance Sheets 5. Statements of Comprehensive Income 6. Statements of Changes in Equity 7. Statements of Cash Flows 8. Notes to Financial Statements (1) Company history (2) Approval date and procedures of the financial statements (3) New standards, amendments and interpretations adopted (4) Summary of significant accounting policies (5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty (6) Explanation of significant accounts (7) Related-party transactions (8) Pledged assets (9) Commitments and contingencies (10) Losses Due to Major Disasters (11) Subsequent Events (12) Other (13) Other disclosures (a) Information on significant transactions (b) Information on investees (c) Information on investment in mainland China (d) Major shareholders (14) Segment information 9. List of major account titles

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KPMG

台北市110615信義路5段7號68樓(台北101大樓) Telephone 電話 + 886 2 8101 6666 68F., TAIPEI 101 TOWER, No. 7, Sec. 5, Fax 傳真 + 886 2 8101 6667 Xinyi Road, Taipei City 110615, Taiwan (R.O.C.) Internet 網址 home.kpmg/tw

Independent Auditors’ Report

To the Board of Directors of TAIWAN FERTILIZER CO., LTD.:

Opinion

We have audited the financial statements of TAIWAN FERTILIZER CO., LTD.(“ the Company” ), which comprise the Balance Sheets as of December 31, 2020 and 2019, and the statement of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the report of other auditors (please refer to Other Matter paragraph), the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2020 and 2019, and its financial performance and its cash flows for the year ended December 31, 2020 and 2019 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards (“IFRSs”), International Accounting Standards (“ IASs” ), interpretation 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 Certification of Financial Statements by Certified Public Accountants and the 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 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 of 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 financial statements for the year ended December 31, 2020. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. The key audit matters that, in our professional judgment, should be communicated are as follows:

1. Impairment assessment of investments in equity method (including goodwill and intangible assets with an indefinite useful life)

Please refer to notes 4(n), 5 and 6(h) for the “recognition of impairment assessment of investments accounted for by the equity method” , “ assumptions used and uncertainties considered in determining investments accounted for by the equity method, investments for impairment loss and obsolescence” and “balances of impairment loss and obsolescence”, respectively.

KPMG, a Taiwan partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.

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Key audit matters:

As described in Note 6(h) of the accompanying financial statements, the Company acquired control over Taiwan Yes Deep Ocean Water Co., Ltd. (“ Taiwan Yes” ), which was accounted for as acquisition using the equity method (including the goodwill and trademark with indefinite useful lives). In accordance with IAS 36 “ Impairment of Assets” , goodwill and intangible assets with indefinite useful lives should be tested for impairment annually; and based on the estimated future cash flows of Taiwan Yes (the cash-generating unit), the recoverable amount was evaluated in order to determine whether there is any impairment of the aforementioned investment accounted for by using the equity method (including the goodwill and intangible assets with indefinite useful lives). Since the estimated future cash flows requires management’s forecasting of the industry overview and the future operating performance of Taiwan Yes, the recoverable amount will be affected and an impairment loss will be incurred should there be any change in the situation. Therefore, the impairment assessment of equity method investments has been identified as a key audit matter.

How the matter was addressed in our audit:

Our principal audit procedures included confirming whether the management have properly assessed the recoverability of goodwill based on the forecasted cash flows within the following 5 years, wherein the assessment have been reviewed by the competent authority; and verifying whether the management has disclosed the impairment of goodwill in the financial statements on a timely manner after identifying such circumstance. In addition, we also assessed the adequacy of the forecasting methods and the discount rate used by the management, and compared the discount rate with external information; verified the management’ s assumptions with external relevant information, and evaluated the major assumptions (including the forecast revenue growth rate, discount rate and forecast margin).

Other Matter

We did not audit the financial statements as of and for the years ended December 31, 2020 and 2019, of certain investees in equity method. Those statements were audited by other auditors, whose reports have been furnished to us. Our opinion, insofar as it relates to the amounts included in the Corporation’ s financial statements for these investees, is based solely on the reports of the other auditors. As of December 31, 2020 and 2019, the investments in the aforementioned investees are 12.15% and 12.33% ($9,202,183 thousand and $9,304,896 thousand), of the Corporation’s total assets. For the years ended December 31, 2020 and 2019, the investment income on the above said investees are 20.03% and 30.51% ($593,696 thousand and $751,432 thousand) of the Corporation’s income before income tax.

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

Management is responsible for the preparation and fair presentation of the financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs, IASs, interpretation 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 financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the 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 are responsible for overseeing the Company’s financial reporting process.

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Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s 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 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:

1. Identify and assess the risks of material misstatement of the 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.

2. 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.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

4. 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 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 auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

5. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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

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.

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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 financial statements of the current period 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.

The engagement partners on the audit resulting in this independent auditors’ report are Kuo-Yang Tseng and Heng-Shen Lin.

KPMG

Taipei, Taiwan (Republic of China) March 25, 2021

Notes to Readers

The accompanying parent company only financial statements are intended only to present the financial position, financial performance and 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 such parent company only financial statements are those generally accepted and applied in the Republic of China.

The independent auditors’ audit 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 independent auditors’ audit report and parent company only financial statements, the Chinese version shall prevail.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) TAIWAN FERTILIZER CO., LTD.

Balance Sheets

December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Assets Current assets: 1100 Cash and cash equivalents (note 6(a) and (t)) 1110 Total current financial assets at fair value through profit or loss (note 6(b) and (t)) 1120 Total current financial assets at fair value through other comprehensive income (note 6(c) and (t)) 1150 Notes receivable, net (note 6(e)、(q) and (t)) 1170 Accounts receivable, net (note 6(e)、(q)、(t) and 7) 1200 Other receivables, net (note 6(f)、(t) and 7) 130X Total inventories (note 6(g) ) 1410 Total prepayments (note 7) 1476 Other current financial assets (note 6(a) and (t)) 1470 Total other current assets Non-current assets: 1517 Total non-current financial assets at fair value through other comprehensive income (note 6(c) and (t)) 1535 Non-current financial assets at amortised cost, net (note 6(d) and (t)) 1550 Investments accounted for using equity method, net (note 6(h) and (t)) 1600 Total property, plant and equipment (note6(i)) 1755 Right-of-use assets (note 6(j)) 1760 Investment property, net (note 6(k) and (l)) 1780 Total intangible assets 1840 Deferred tax assets (note 6(n)) 1930 Long-term notes and accounts receivable, net (note 6(f) and (t)) 1980 Total other non-current financial assets (note 6(a)、(t) and 8) 1990 Total other non-current assets, others (note 6(t)) Total assets	December 31, 2020 Amount % $ 2,521,222 3 1,300,013 2 112,566 - 117,543 - 646,808 1 11,523 - 2,774,010 4 285,034 - 900,000 1 7,299 - 8,676,018 11 2,712,178 4 28,507 - 12,121,677 16 12,421,858 17 1,122,080 2 38,094,155 50 11,724 - 285,570 - 115,396 - 159,188 - 20,020 - 67,092,353 89 $ 75,768,371 100	December 31, 2019 Amount % 1,678,358 2 1,560,181 2 94,691 - 193,897 - 735,781 1 17,716 - 2,393,906 3 114,599 - 4,157,246 6 1,836 - 10,948,211 14 1,962,947 3 30,104 - 11,701,824 16 13,013,485 17 1,221,976 2 36,065,374 48 16,018 - 174,731 - 130,256 - 127,046 - 50,491 - 64,494,252 86 75,442,463 100 Liabilities and Equity Current liabilities: 2130 Current contract liabilities (note 6(q)) 2150 Total notes payable (note 6 (t)) 2170 Total accounts payable (note 6(t) and 7) 2200 Total other payables (note 6(t) and 7) 2230 Current tax liabilities 2280 Current lease liabilities (note 6(t)) 2313 Unearned revenue (note 6(k)) 2310 Other advance receipts 2399 Other current liabilities, others (note 6(k)) Non-Current liabilities: 2550 Total non-current provisions 2570 Total deferred tax liabilities (note 6(n)) 2580 Non-current lease liabilities (note 6(t)) 2630 Long-term deferred revenue (note 6(k)) 2640 Net defined benefit liability, non-current (note 6(m)) 2645 Guarantee deposits received (note 6(t) and 7) Total liabilities Equity (note 6(o)): 3100 Total capital stock 3200 Total capital surplus Retained earnings: 3310 Legal reserve 3320 Special reserve 3350 Total unappropriated retained earnings 3400 Total other equity interest Total equity Total liabilities and equity	December 31, 2020		December 31, 2019
			Amount %		Amount %
			$ 83,449 - 1,060 - 463,288 1 561,234 1 71,196 - 27,795 - 389,525 1 305,889 - 52,190 - 1,955,626 3 223,648 - 7,104,724 10 136,462 - 14,627,720 19 131,319 - 280,161 - 24,459,660 32 9,800,000 13 2,244,652 3 3,397,549 5 30,823,647 41 3,391,695 4 1,651,168 2 51,308,711 68 $ 75,768,371 100		106,194 - 10,019 - 616,437 1 525,532 1 127,638 - 27,245 - 13,395 - - - 437,783 1 1,864,243 3 223,648 - 7,089,164 10 164,257 - 15,018,003 20 107,486 - 250,609 - 24,717,410 33 9,800,000 13 2,244,073 3 3,191,153 4 31,147,849 41 2,994,828 4 1,347,150 2 50,725,053 67 75,442,463 100

See accompanying notes to parent company only financial statements.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) TAIWAN FERTILIZER CO., LTD.

Statements of Comprehensive Income

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars , Except for Earnings Per Common Share)

2020 Amount % 4000 Total operating revenue (note 6(k)、(l)、(q) and 7) $ 9,931,129 100 5000 Total operating costs (note 6(g)、(m)、7 and 12) (7,458,489) (75) 5900 Gross profit from operations 2,472,640 25 Operating expenses (note 6(m)、(r) and 12): 6100 Total selling expenses (258,061) (2) 6200 Total administrative expenses (959,675) (10) 6300 Total research and development expenses (66,602) (1) (1,284,338) (13) 6900 Net Operating income 1,188,302 12 Non-operating income and expenses: 7100 Total interest income (note 6(s)) 37,684 - 7010 Total other income (note 6(c) and (s)) 97,462 1 7020 Other gains and losses, net (note 6(s) and 12) 1,020,337 10 7050 Finance costs, net (note 6(s)) (3,581) - 7060 Share of profit (loss) of associates and joint ventures accounted for using equity method, net 623,979 7 Total non-operating income and expenses 1,775,881 18 Profit from continuing operations before tax 2,964,183 30 7950 Less: Income tax expenses (note 6(n)) 511,302 5 Profit 2,452,881 25 8300 Other comprehensive income: 8310 Components of other comprehensive income that will not be reclassified to profit or loss 8311 Gains (losses) on remeasurements of defined benefit plans (35,816) - 8316 Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income 715,107 7 8330 Share of other comprehensive income of subsidiaries, associates and joint ventures accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss 10,833 - 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss (7,163) - 697,287 7 8360 Components of other comprehensive income (loss) that will be reclassified to profit or loss 8380 Share of other comprehensive income of subsidiaries, associates and joint ventures accounted for using equity method, components of other comprehensive income that will be reclassified to profit or loss (512,377) (5) 8399 Income tax related to components of other comprehensive income that will be reclassified to profit or loss (101,288) (1) Components of other comprehensive income that will be reclassified to profit or loss (411,089) (4) 8300 Other comprehensive income 286,198 3 8500 Total comprehensive income $ 2,739,079 28 Basic earnings per share (note 6(p)) 9750 Basic earnings per share $ 2.50 9850 Diluted earnings per share $ 2.50

2019 Amount % 12,624,716 100 (9,640,510) (76) 2,984,206 24 (255,859) (2) (1,033,241) (8) (66,440) (1) (1,355,540) (11) 1,628,666 13 75,204 1 76,370 1 (34,615) - (4,089) - 721,671 6 834,541 8 2,463,207 21 399,252 3 2,063,955 18 (4,398) - 195,108 2 2,740 - (879) - 194,329 2 (199,912) (2) (39,297) - (160,615) (2) 33,714 - 2,097,669 18 2.11

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See accompanying notes to parent company only financial statements.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) TAIWAN FERTILIZER CO., LTD.

Statements of Changes in Equity

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Balance at January 1, 2019 Profit Other comprehensive income Total comprehensive income Appropriation and distribution of retained earnings: Legal reserve appropriated Cash dividends of ordinary share Reversal of special reserve Other changes in capital surplus Balance at December 31, 2019 Profit Other comprehensive income Total comprehensive income Appropriation and distribution of retained earnings: Legal reserve appropriated Cash dividends of ordinary share Reversal of special reserve Other changes in capital surplus Balance at December 31, 2020	Share capital		Capital surplus				Retained earnings	Retained earnings	Retained earnings			Total other equity interest Unrealized gains Exchange differences on translation of foreign financial statements (losses) on financial assets measured at fair value through other comprehensive income Total other equity interest	Total other equity interest Unrealized gains Exchange differences on translation of foreign financial statements (losses) on financial assets measured at fair value through other comprehensive income Total other equity interest	Total other equity interest Unrealized gains Exchange differences on translation of foreign financial statements (losses) on financial assets measured at fair value through other comprehensive income Total other equity interest	Total other equity interest Unrealized gains Exchange differences on translation of foreign financial statements (losses) on financial assets measured at fair value through other comprehensive income Total other equity interest	Total other equity interest Unrealized gains Exchange differences on translation of foreign financial statements (losses) on financial assets measured at fair value through other comprehensive income Total other equity interest	Total other equity interest Unrealized gains Exchange differences on translation of foreign financial statements (losses) on financial assets measured at fair value through other comprehensive income Total other equity interest	Total equity 50,782,946 2,063,955 33,714 2,097,669 - (2,156,000) - 438 50,725,053 2,452,881 286,198 2,739,079 - (2,156,000) - 579 51,308,711
												Exchange differences on translation of foreign financial statements		Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income
	Ordinary shares				Legal reserve		Special reserve	Unappropriate d retained earnings			Total retained earnings
	$ 9,800,000 - - - - - - - 9,800,000 - - - - - - - $ 9,800,000		2,243,635		2,963,022		31,234,687		3,228,945		37,426,654		109,064		1,203,593		1,312,657 - 34,493 34,493 - - - - 1,347,150 - 304,018 304,018 - - - - 1,651,168
			- -		- -		- -								- 195,108
			-		-		-								195,108
			- - - 438		228,131 - - -										- - - -
			2,244,073 - -		3,191,153 - -										1,398,701 - 715,107
			-		-										715,107
			- - - 579		206,396 - - -										- - - -
			2,244,652		3,397,549										2,113,808

See accompanying notes to parent company only financial statements.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) TAIWAN FERTILIZER CO., LTD.

Statements of Cash Flows

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities: Profit before tax Adjustments: Adjustments to reconcile profit (loss): Depreciation expense Amortization expense Net gain on financial assets or liabilities at fair value through profit or loss Interest expense Interest income Dividend income Share of profit of subsidiaries,associates and joint ventures accounted for using equity method (Gain) loss on disposal of property, plant and equipment, net Gain on disposal of investment properties Unrealized foreign currency exchange loss Loss on disposal of investments Donation expense Total adjustments to reconcile profit (loss) Changes in operating assets and liabilities: Changes in operating assets: Decrease (increase) in notes receivable Decrease (increase) in accounts receivable Decrease (increase) in other receivable Decrease (increase) in inventories Decrease (increase) in prepayments Decrease (increase) in other current assets Total changes in operating assets Changes in operating liabilities: Increase (decrease) in contract liabilities Increase (decrease) in notes payable Increase (decrease) in accounts payable Increase (decrease) in other payable Increase (decrease) in receipts in advance Increase (decrease) in other current liabilities Increase (decrease) in net defined benefit liability Increase (decrease) in deferred credits Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash inflow generated from operations Interest received Dividends received Interest paid Income taxes refund (paid) Net cash flows from (used in) operating activities

For the years ended December 31 2020 2019 $ 2,964,183 2,463,207 1,024,419 993,158 6,524 6,661 (5,065) (9,926) 3,581 4,089 (37,684) (75,204) (41,776) (41,806) (623,979) (721,671) (1,025) 21 (1,047,961) (15,405) 1,597 624 - 108 10,075 19,532 (711,294) 160,181 76,354 (12,130) 88,973 292,938 4,031 1,562 (380,104) 365,271 (170,435) 415,524 (5,463) 753 (386,644) 1,063,918 (22,745) (60,936) (8,959) 10,019 (153,149) (149,391) 13,260 (105,563) 292,494 9,306 4,016 (3,070) (11,983) (11,159) (390,367) (392,092) (277,433) (702,886) (664,077) 361,032 (1,375,371) 521,213 1,588,812 2,984,420 39,026 75,347 234,284 1,324,413 (3,581) (4,089) (554,572) (674,168) 1,303,969 3,705,923

2020 $ 2,964,183 1,024,419 6,524 (5,065) 3,581 (37,684) (41,776) (623,979) (1,025) (1,047,961) 1,597 - 10,075 (711,294) 76,354 88,973 4,031 (380,104) (170,435) (5,463) (386,644) (22,745) (8,959) (153,149) 13,260 292,494 4,016 (11,983) (390,367) (277,433) (664,077) (1,375,371) 1,588,812 39,026 234,284 (3,581) (554,572) 1,303,969

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) TAIWAN FERTILIZER CO., LTD.

Statements of Cash Flows (CONT’D)

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) investing activities: Acquisition of financial assets at fair value through other comprehensive income Proceeds from capital reduction of financial assets at fair value through other comprehensive income Acquisition of financial assets designated at fair value through profit or loss Proceeds from disposal of financial assets designated at fair value through profit or loss Acquisition of investments accounted for using equity method Proceeds from disposal of subsidiaries Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease (increase) in refundable deposits Decrease in other receivables Acquisition of intangible assets Acquisition of investment properties Proceeds from disposal of investment properties Decrease (increase) in other financial assets Increase in other non-current assets Net cash flows from (used in) investing activities Cash flows from (used in) financing activities: Increase (decrease) in guarantee deposits received Payment of lease liabilities Cash dividends paid Net cash flows from (used in) financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period

See accompanying notes to parent company only financial statements.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) TAIWAN FERTILIZER CO., LTD.

Notes to Financial Statements

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(1) Company history

TAIWAN FERTILIZER CO., LTD. (the “Company”). was incorporated in May 1946. The Company’s registered office address is located at 6F, No. 88, Nanjing E. Rd., Sec.2, Taipei, 10457, Taiwan. The Company is mainly engaged in manufactures and sells inorganic and organic fertilizers and other chemical products, constructs and leases real estate services. The Company’s shares were listed on the TSEC since March 24, 1998.

(2) Approval date and procedures of the financial statements:

The accompanying financial statements were authorized for issue by the Board of Directors on March 25, 2021.

(3) New standards, amendments and interpretations adopted:

• (a) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial Supervisory Commission, R.O.C. (“FSC”) which have already been adopted.

The Company has initially adopted the following new amendments, which do not have a significant impact on its financial statements, from January 1, 2020:

• ●Amendments to IFRS 3 “Definition of a Business”

• ●Amendments to IFRS 9, IAS39 and IFRS7 “Interest Rate Benchmark Reform”

• ●Amendments to IAS 1 and IAS 8 “Definition of Material”

• ●Amendments to IFRS 16 “COVID-19-Related Rent Concessions”

• (b) The impact of IFRS issued by the FSC but not yet effective

The Company assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2021, would not have a significant impact on its financial statements:

• ●Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”

• －

• ●Amendments to IFRS 9, IAS39, IFRS7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform Phase 2”

(Continued)

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TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

• (c) The impact of IFRS issued by IASB but not yet endorsed by the FSC

The following new and amended standards, which may be relevant to the Company, have been issued by the International Accounting Standards Board (IASB), but have yet to be endorsed by the FSC:

Standards or Effective date per Interpretations Content of amendment IASB Amendments to IFRS 10 and The amendments address an acknowledged Effective date to be IAS 28 “Sale or Contribution of inconsistency between the requirements in determined by IASB Assets Between an Investor and IFRS 10 and those in IAS 28 (2011) in Its Associate or Joint Venture” dealing with the sale or contribution of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain or loss is recognized when a transaction involves a business (whether it is housed in a subsidiary or not). A partial gain or loss is recognized when a transaction involves assets that do not constitute a business, even if these assets are housed in a subsidiary.

The Company is evaluating the impact of its initial adoption of the abovementioned standards or interpretations on its financial position and financial performance. The results thereof will be disclosed when the Company completes its evaluation.

The Company does not expect the following other new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on its consolidated financial statements:

• ●IFRS 17 “ Insurance Contracts” and amendments to IFRS 17 “ Insurance Contracts”

• ●Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”

• －

• ●Amendments to IAS 16 “Property, Plant and Equipment Proceeds before Intended Use”

• －

• ●Amendments to IAS 37 “Onerous Contracts Cost of Fulfilling a Contract”

• ●Annual Improvements to IFRS Standards 2018-2020

• ●Amendments to IFRS 3 “Reference to the Conceptual Framework”

• ●Amendments to IAS 1 “Disclosure of Accounting Policies”

• ●Amendments to IAS 8 “Definition of Accounting Estimates”

(Continued)

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TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

(4) Summary of significant accounting policies:

The significant accounting policies presented in the financial statements are summarized below. Except for those specifically indicated, the following accounting policies were applied consistently throughout the periods presented in the financial statements.

(a) Statement of compliance

These financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to as “the Regulations”).

• (b) Basis of preparation

• (i) Basis of measurement

  • 1) Financial instruments at fair value through profit or loss are measured at fair value；

  • 2) Financial assets at fair value through other comprehensive income are measured at fair value;

  • 3) The defined benefit liabilities (assets) are measured at fair value of the plan assets less the present value of the defined benefit obligation, limited as explained in note 4(q).

• (ii) Functional and presentation currency

The functional currency is determined based on the primary economic environment in which the entities operate. The financial statements are presented in New Taiwan Dollar, which is the Company’s functional currency. All financial information presented in New Taiwan Dollar has been rounded to the nearest thousand.

(c) Foreign currency

• (i) Foreign currency transaction

Transactions in foreign currencies are translated into the respective functional currencies of Company entities at the exchange rates at the dates of the transactions. At the end of each subsequent reporting period, monetary items denominated in foreign currencies are translated into the functional currencies using the exchange rate at that date. Non-monetary items denominated in foreign currencies that are measured at fair value are translated into the functional currencies using the exchange rate at the date that the fair value was determined. Nonmonetary items denominated in foreign currencies that are measured based on historical cost are translated using the exchange rate at the date of the transaction.

Exchange differences are generally recognized in profit or loss, except for those differences relating to the following, which are recognized in other comprehensive income:

• 1) an investment in equity securities designated as at fair value through other comprehensive income;

• 2) a financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective; or

(Continued)

11

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

• 3) qualifying cash flow hedges to the extent that the hedges are effective.

(ii) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into the Company’s functional currency at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into the Company’ s functional currency at the average exchange rate. Exchange differences are recognized in other comprehensive income.

When a foreign operation is disposed of such that control, significant influence, or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Company disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to noncontrolling interests. When the Company disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

When the settlement of a monetary receivable from or payable to a foreign operation is neither planned nor likely to occur in the foreseeable future. Exchange differences arising from such a monetary item that are considered to form part of the net investment in the foreign operation are recognized in other comprehensive income.

• (d) Classification of current and non-current assets and liabilities

An asset is classified as current when:

• (i) It is expected to be realized, or intended to be sold or consumed, in the normal operating cycle;

• (ii) It is held primarily for the purpose of trading;

(iii) It is expected to be realized within twelve months after the reporting period; or

• (iv) The asset is cash and cash equivalent (as defined in IAS 7) unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is classified as current when:

• (i) It is expected to be settled in the normal operating cycle;

• (ii) It is held primarily for the purpose of trading;

• (iii) If is due to be settled within twelve months after the reporting period; or

• (iv) It does not have an unconditional right to defer settlement for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by issuing equity instruments do not affect its classification.

(Continued)

12

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

All other liabilities are classified as non-current.

(e) Cash and cash equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents are shortterm, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. Time deposits which meet the above definition and are held for the purpose of meeting shortterm cash commitments rather than for investment or other purposes should be recognized as cash equivalents.

(f) Financial instruments

Trade receivables and debt securities issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Group becomes a party to the contractual provisions of the instrument. A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

(i) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

On initial recognition, a financial asset is classified as measured at: amortized cost; Fair value through other comprehensive income (FVOCI) – debt investment; FVOCI – equity investment; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

1) Financial assets measured at amortized cost

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

• ‧it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

• ‧its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

These assets are subsequently measured at amortized cost, which is the amount at which the financial asset is measured at initial recognition, plus/minus, the cumulative amortization using the effective interest method, adjusted for any loss allowance. Interest income, foreign exchange gains and losses, as well as impairment, are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

(Continued)

13

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

• 2) Fair value through other comprehensive income (FVOCI )

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

• ‧ it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

• ‧its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment’ s fair value in other comprehensive income. This election is made on an instrument-by-instrument basis.

Debt investments at FVOCI are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in other comprehensive income. On derecognition, gains and losses accumulated in other comprehensive income are reclassified to profit or loss.

Equity investments at FVOCI are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in other comprehensive income and are never reclassified to profit or loss.

Dividend income is recognized in profit or loss on the date on which the Company’s right to receive payment is established.

• 3) Fair value through profit or loss (FVTPL)

All financial assets not classified as amortized cost or FVOCI described as above are measured at FVTPL, including derivative financial assets and accounts receivable (except for those presented as accounts receivable but measured at FVTPL). On initial recognition, the Company may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.

• 4) Impairment of financial assets

The Company recognizes loss allowances for expected credit losses (ECL) on financial assets measured at amortized cost (including cash and cash equivalents, amortized costs, notes and trade receivables, other receivable, leases receivable, guarantee deposit paid and other financial assets), debt investments measured at FVOCI and contract assets.

The Company measures loss allowances at an amount equal to lifetime ECL, except for the following which are measured as 12-month ECL:

(Continued)

14

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

• ‧ debt securities that are determined to have low credit risk at the reporting date; and

• ‧ other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowance for trade receivables and contract assets are always measured at an amount equal to lifetime ECL.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on the Company’ s historical experience and informed credit assessment as well as forwardlooking information.

The Company considers a debt security to have low credit risk when its credit risk rating is equivalent to the globally understood definition of ‘ investment grade which is considered to be BBB- or higher per Standard & Poor’s, Baa3 or higher per Moody’s or twA or higher per Taiwan Ratings’.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).

The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

At each reporting date, the Company assesses whether financial assets carried at amortized cost and debt securities at FVOCI are credit-impaired. A financial asset is ‘ credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial assets is credit-impaired includes the following observable data:

‧significant financial difficulty of the borrower or issuer;

• ‧a breach of contract such as a default or being more than 180 days past due;

• ‧the lender of the borrower, for economic or contractual reasons relating to the borrower's financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider;

(Continued)

15

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

• ‧it is probable that the borrower will enter bankruptcy or other financial reorganization; or

• ‧the disappearance of an active market for a security because of financial difficulties.

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is charge to profit or loss and is recognized in other comprehensive income instead of reducing the carrying amount of the asset.

The gross carrying amount of a financial asset is written off when the Company has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For individual customers, the Company has a policy of writing off the gross carrying amount when the financial asset is 180 days past due based on historical experience of recoveries of similar assets. For corporate customers, the Company individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Company expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company’s procedures for recovery of amounts due.

• 5) Derecognition of financial assets

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Company enters into transactions whereby it transfers assets recognized in its statement of balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

• (ii) Financial liabilities and equity instruments

• 1) Classification of debt or equity

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

• 2) Equity instrument

An equity instrument is any contract that evidences residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued are recognized as the amount of consideration received, less the direct cost of issuing.

(Continued)

16

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

3) Treasury shares

When shares recognized as equity are repurchased, the amount of the consideration paid, which includes directly attributable costs, is recognized as a deduction from equity. Repurchased shares are classified as treasury shares. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity, and the resulting surplus or deficit on the transaction is recognized in capital surplus or retained earnings (if the capital surplus is not sufficient to be written down).

4) Financial liabilities

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss.

Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

5) Derecognition of financial liabilities

The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Company also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

On derecognition of a financial liability, the difference between the carrying amount of a financial liability extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

6) Offsetting of financial assets and liabilities

Financial assets and financial liabilities are offset and the net amount presented in the statement of balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

7) Financial guarantee contract

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.

(Continued)

17

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

Financial guarantee contract liabilities are measured initially at their fair values and, if not designated as at FVTPL and do not arise from a transfer of an asset, are measured subsequently at the higher of: (a) the amount of the loss allowance determined in accordance with IFRS 9; and (b) the amount recognized initially less, where appropriate, cumulative amortization recognized in accordance with the revenue recognition policies set out below.

(g) Inventories

－ Inventories included Raw materials, finished goods, merchandise, and construction-in-progress land and projects. Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on the weighted average method, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their present location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost, of completion and selling expenses.

(h) Investment in associates

Associates are those entities in which the Company has significant influence, but not control or joint control, over the financial and operating policies.

Investments in associates are accounted for using the equity method and are recognized initially at cost. The cost of the investment includes transaction costs. The carrying amount of the investment in associates includes goodwill arising from the acquisition, less any accumulated impairment losses.

The financial statements include the Company’s share of the profit or loss and other comprehensive income of equity accounted investees, after adjustments to align their accounting policies with those of the Company, from the date on which significant influence commences until the date on which significant influence ceases.

When changes in an associate’s equity are not recognized in profit or loss or other comprehensive income of the associate and such changes do not affect the Company’s ownership percentage of the associate, the Company recognizes the Company’ s share of change in equity of the associate in capital reserves in proportion to its ownership.

Gains and loses resulting from the transactions between the Company and an associate are recognized only to the extent of unrelated Company’s interests in the associate.

When the Company’s share of losses of an associate equals or exceeds its interest in an associate, it discontinues recognizing its share of further losses. After the recognized interest is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associates.

(i) Subsidiaries

The subsidiaries in which the Company holds controlling interest are accounted for under equity method in the nonconsolidated financial statements. Under equity method, the net income, other comprehensive income and equity in the nonconsolidated financial statement are the same as those attributable to the owners of parent in the consolidated financial statements.

(Continued)

18

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

The changes in ownership of the subsidiaries that did not resule in the Company’s loss of control.are recognized as equity transaction.

(j) Investment property

Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business or for administrative purposes. Investment property is measured at cost on initial recognition. Subsequent to initial recognition, investment property is measured at initial acquisition cost less accumulated depreciation and accumulated impairment losses. The methods for depreciating and determining the useful life and residual value of investment property are the same as those adopted for property, plant and equipment.

Any gain or loss on disposal of an investment property (calculated as the difference between the net proceeds from disposal and the carrying amount) is recognized in profit or loss.

Rental income from investment property is recognized as other revenue on a straight-line basis over the term of the lease. Lease incentives granted are recognized as an integral part of the total rental income, over the term of the lease.

• (k) Property, plant and equipment

• (i) Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. The cost of certain items of property, plant and equipment on January 1, 2012, the Company’ s date of transition to the Standards, was determined with reference to its fair value at that date.

If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.

(ii) Subsequent expenditure

Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.

• (iii) Depreciation

Depreciation is calculated on the depreciable amount of an asset using the straight-line basis over its useful life. The depreciable amount of an asset is determined based on the cost less its residual value.

Land has an unlimited useful life and therefore is not depreciated.

(Continued)

19

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

The estimated useful lives for the current and comparative years of significant items of property, plant and equipment are as follows:

Buildings Machine Instrument equipment Miscellaneous equipment Item Buildings: Leasehold improvements and others Buildings, warehouses, storage sheds	3～60years 3～40years 3～15years 3～15years Useful lives Item Useful lives Machine: 3～15 years Production equipment 3～15 years 16～60 years Storage tanks, power transmission systems, etc. 16～40 years

Depreciation methods, useful lives, and residual values are reviewed at each annual reporting date, and adjusted if appropriate.

• (iv) Reclassification as investment property

A property is reclassified to investment property at its carrying amount when the use of the property changes from owner-occupied to investment property.

• (l) Leases

• (i) Identifying a lease

At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:

• 1) the contract involves the use of an identified asset – this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified; and

• 2) the customer has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and

• 3) the customer has the right to direct the use of the asset throughout the period of use only if either:

• the customer has the right to direct how and for what purpose the asset is used throughout the period of use; or

(Continued)

20

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

• the relevant decisions about how and for what purpose the asset is used are predetermined and:

• － the customer has the right to operate the asset throughout the period of use, without the supplier having the right to change those operating instructions; or

• － the customer designed the asset in a way that predetermines how and for what purpose it will be used throughout the period of use.

On the day after the lease is completed or when the contract is re evaluated to include a lease, the Company allocates the consideration in the contract to individual lease components on the basis of a relatively separate price. However, when leasing land and buildings, the Company chooses not to distinguish between non lease components but treat lease components and non lease components as a single lease component.

• (ii) As a lessee

The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

• － fixed payments including in-substance fixed payments;

• － variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

• － amounts expected to be payable under a residual value guarantee; and

• － payments for purchase or termination options that are reasonably certain to be exercised.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when:

• － there is a change in future lease payments arising from the change in an index or rate; or

(Continued)

21

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

• －

• there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee; or

• － there is a change in the lease term resulting from a change of its assessment on whether it will exercise an option to purchase the underlying asset, or

• － there is a change of its assessment on whether it will exercise a purchase, extension or termination option; or

• －

• there is any lease modifications

When the lease liability is remeasured, other than lease modifications, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or in profit and loss if the carrying amount of the right-of-use asset has been reduced to zero.

When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Company accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognize in profit or loss any gain or loss relating to the partial or full termination of the lease.

The Company presents right-of-use assets that do not meet the definition of investment and lease liabilities as a separate line item respectively in the statement of financial position.

The Company has elected not to recognize right-of-use assets and lease liabilities for shortterm leases of miscellaneous equipment that have a lease term of 12 months or less and leases of low-value assets, including IT equipment. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

• (iii) As a lessor

When the Company acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease. To classify each lease, the Company makes an overall assessment of whether the lease transfers to the lessee substantially all of the risks and rewards of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then the lease is an operating lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Company applies the exemption described above, then it classifies the sub-lease as an operating lease.

If an arrangement contains lease and non-lease components, the Company applies IFRS15 to allocate the consideration in the contract.

(Continued)

22

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

The lessor recognizes a finance lease receivable at an amount equal to its net investment in the lease. Initial direct costs, such as lessors to negotiate and arrange a lease, are included in the measurement of the net investment. The lessor recognizes the interest income over the lease term based on a pattern reflecting a constant periodic rate of return on the lessor’ s net investment in the lease. The Company recognizes lease payments received under operating leases as income on a straight-line basis over the lease term as part of ‘other income’.

(m) Intangible assets

• (i) Recognition and measurement

Goodwill arising on the acquisition of subsidiaries is measured at cost, less accumulated impairment losses.

Expenditure on research activities is recognized in profit or loss as incurred.

Development expenditure is capitalized only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Company intends to, and has sufficient resources to, complete development and to use or sell the asset. Otherwise, it is recognized in profit or loss as incurred. Subsequent to initial recognition, development expenditure is measured at cost, less accumulated amortization and any accumulated impairment losses.

Other intangible assets that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortization and any accumulated impairment losses.

• (ii) Subsequent Expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditures, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.

• (iii) Amortization

Amortization is calculated over the cost of the asset, less its residual value, and is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use.

The estimated useful lives for current and comparative periods are as follows:

Computer software cost 5 years Patent 7~8 years

Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(Continued)

23

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

(n) Impairment of non financial assets

At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other than inventories, contract assets, deferred tax assets and investment properties and biological assets, measured at fair value, less costs) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill is tested annually for impairment.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.

Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(o) Provisions

A provision is recognized if, as a result of a past event, the Company has a present obligation that can be estimated reliably, and an outflow of economic benefits is possibly required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost.

• (p) Revenue Recognition

• (i) Revenue from contracts with customers

Revenue is measured based on the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control of a good or a service to a customer. The accounting policies for the Company’ s main types of revenue are explained below.

(Continued)

24

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

1) Sale of goods

The Company manufactures and sells fertilizer products to market. The Company recognizes revenue when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’ s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Company has objective evidence that all criteria for acceptance have been satisfied.

A receivable is recognized when the goods are delivered as this is the point in time that the Group has a right to an amount of consideration that is unconditional.

2) Land development and sale of real estate

The Company develops and sells residential properties and usually sales properties in advance during construction or before construction begins. Revenue is recognized when control over the properties has been transferred to the customer. The properties have generally no alternative use for the Company due to contractual restrictions. However, an enforceable right to payment does not arise until legal title of a property has passed to the customer. Therefore, revenue is recognized at a point in time when the legal title has passed to the customer.

The revenue is measured at the transaction price agreed under the contract. For sale of readily available house, in most cases, the consideration is due when legal title of a property has been transferred. While deferred payment terms may be agreed in rare circumstances, the deferral never exceeds twelve months. The transaction price is therefore not adjusted for the effects of a significant financing component. For preselling properties, the consideration is usually received by installment during the period from contract inception until the transfer of properties to the customer. If the contract includes a significant financing component, the transaction price will be adjusted for the effects of the time value of money during the period, using the specific borrowing rate of the construction project. Receipt of a prepayment from a customer is recognized as contract liability. Interest expense and contract liability are recognized when adjusting the effects of the time value of money. Accumulated amount of contract liability is recognized as revenue when control over the property has been transferred to the customer.

• 3) The Company's operating leasing business is classified into operating leases based on lease conditions and the possibility of cash receivables, and recognizes relevant operating lease income.

• 4) Financing componentsx

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

(Continued)

25

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

(q) Employee benefits

(i) Defined contribution plans

Obligations for contributions to defined contribution plans are expensed as the related service is provided.

(ii) Defined benefit plans

The Company’s net obligation in respect of defined benefit plans is calculated separately for each the plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Company, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income, and accumulated in retained earnings within equity. The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset). Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

(iii) Other long-term employee benefits

The Company’ s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its present value. Remeasurements are recognized in profit or loss in the period in which they arise.

(iv) Termination benefits

Termination benefits are expensed at the earlier of when the Company can no longer withdraw the offer of those benefits and when the Group recognizes costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the reporting date, then they are discounted.

(Continued)

26

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

• (v) Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

• (r) Income Taxes

Income taxes comprise current taxes and deferred taxes. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes are recognized in profit or loss.

Current taxes comprise the expected tax payables or receivables on the taxable profits (losses) for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payables or receivables are the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date.

Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes are recognized except for the following:

• (i) temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits (losses) at the time of the transaction;

• (ii) temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

(iii) taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax assets are recognized for the carry forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefits will be realized; such reductions are reversed when the probability of future taxable profits improves.

Deferred taxes are measured at tax rates that are expected to be applied to temporary differences when they reserve, using tax rates enacted or substantively enacted at the reporting date, and reflect uncertainty related to income taxes, if any.

Deferred tax assets and liabilities are offset if the following criteria are met:

• (i) the Company has a legally enforceable right to set off currenttax assets against current tax liabilities; and

(Continued)

27

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

• (ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:

• 1) the same taxable entity; or

• 2) different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

(s) Earnings per share

Disclosures are made of basic and diluted earnings per share attributable to ordinary equity holders of the Company. The basic earnings per share is calculated based on the profit attributable to the ordinary shareholders of the Company divided by weighted average number of ordinary shares outstanding. The diluted earnings per share is calculated based on the profit attributable to ordinary shareholders of the Company, divided by weighted average number of ordinary shares outstanding after adjustment for the effects of all potentially dilutive ordinary shares, such as remuneration of employees and employee stock options.

(t) Operating segments

Please refer to the consolidated financial statements of TAIWAN FERTILIZER CO., LTD. for the years ended December 31, 2020 and 2019 for operating segments information.

(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty:

The preparation of the financial statements in conformity with the IFRSs endorsed by the FSC requires management to make judgments, estimates, and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income, and expenses. Actual results may differ from these estimates.

The management continues to monitor the accounting estimates and assumptions. The management recognizes any changes in accounting estimates during the period and the impact of those changes in accounting estimates in the next period.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year is as follows. Those assumptions and estimation have been updated to reflect the impact of COVID-19 pandemic:

(a) Impairment assumptions of carrying amounts of subsidiaries.

The assessment of impairment of subsidiaries requires the Company to allocate the subsidiaries' CGUs to the recoverable amount. To calculate the recoverable amount of relevant CGUs, the management should use the appropriate discount rate for calculating the present value to estimate the future cash flow of CGUs . If the actual cash flow less than expectation, the Company would have significant impairment loss.

(Continued)

28

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

Regarding assumptions and estimation uncertainties, valuation has a significant risk of resulting in a material adjustment within the next financial year as following:

The Company’s accounting policies include measuring financial and non-financial assets and liabilities at fair value through profit or loss. The Company’ s financial instrument valuation group conducts independent verification on fair value by using data sources that are independent, reliable, and representative of exercise prices. This financial instrument valuation group also periodically adjusts valuation models, conducts back testing, renews input data for valuation models, and makes all other necessary fair value adjustments to assure the rationality of fair value.

The Company strives uses the market observable inputs when measuring its assets and liabilities.

The fair value measurements are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

• (a) Level 1: quoted prices (unadjusted) in active markets for identifiable assets or liabilities.

• (b) Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (ie as prices) or indirectly (ie derived from prices).

• (c) Level 3: inputs for the assets or liability that are not based on observable market data.

For any transfer within the fair value hierarchy, the impact of the transfer is recognized on the reporting date. Please refer to Note 6(t), Financial instruments for assumptions used in measuring fair value.

(6) Explanation of significant accounts:

• (a) Cash and cash equivalents

Cash on hand Demand deposits and checking accounts Time deposits with original maturities less than 3 months Cash and cash equivalents	December 31, 2020 $ 2,446 684,776 1,834,000 $ 2,521,222	December 31, 2019
		2,056 453,758 1,222,544
		1,678,358

(i) Time deposits with original maturity of more than 3 months are recorded as other financial assets, and are classified as non-current if their maturities exceed one year, and as follow.

Other current financial assets Other non current financial assets	December 31, 2020 $ 900,000 159,188 $ 1,059,188	December 31, 2019
		4,157,246 127,046
		4,284,292

• (ii) Refer to Note 6(t) for the fair value sensitivity analysis and interest rate risk of the financial assets and liabilities of the Company.

(Continued)

29

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

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

Mandatorily measured at fair value through profit or loss Non-derivative financial assets Beneficiary certificate	December 31, 2020 $ 1,300,013	December 31, 2019
		1,560,181

Please refer to note 6(s) for the amount of remeasurement fair value through profit or loss.

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

Equity investments at fair value through other comprehensive income Stock listed on domestic markets Stock unlisted on domestic markets Total	December 31, 2020 $ 112,566 2,712,178 $ 2,824,744	December 31, 2019
		94,691 1,962,947
		2,057,638

• (i) Equity investments at fair value through other comprehensive income

The Company designated the investments shown above as equity securities as at fair value through other comprehensive income because these equity securities represent those investments that the Company intends to hold for long-term for strategic purposes.

As a result of the investment at fair value through other comprehensive income, the amounts of the dividend revenues recognized for the years ended December 31, 2020 and 2019 were $41,776 thousand and $41,638 thousand, respectively.

A resolution was approved during the general shareholders’ meeting of Top Taiwan V Venture Capital Co., Ltd., one of the financial assets measured at fair value through other comprehensive income by the Company, held on May 10, 2019, for capital reduction, wherein the Company will receive the refund of $2,927 thousand.

A resolution was approved during the provisional meeting of the shareholders of Eminent Venture Capital Corporation, one of the financial assets measured at fair value through other comprehensive income by the Company, held on December 31, 2019, for capital reduction, wherein the Company will receive the refund of $18,000 thousand.

The Company invested in domestic non listed (OTC) company stocks of Eminent III Venture Capital Corporation (Eminent III) through a joint venture agreement in November 2017. Thereafter, a second cash capital increase was approved during the board of directors by Eminent III in December 2019, resulting in the Company to remit the shares amounting to $150,000 thousand in January 2020.

(Continued)

30

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

A resolution was approved during the provisional meeting of the shareholders of Eminent II Venture Capital Corp. (Eminent II), a domestic non-listed (OTC) company and one of the financial assets measured at fair value through other comprehensive income by the Company, held on June 18, 2020, for capital reduction, wherein the Company will receive the refund of $80,000 thousand.

There were no disposals of strategic investments and transfers of any cumulative gain or loss within equity relating to these investments as of December 31, 2020 and 2019.

• (ii) For credit risk, please refer to note 6(t).

• (iii) Financial assets at fair value through other comprehensive income of the Company had not been pledged as collateral for long-term borrowings.

• (d) Financial assets measured at amortized cost

Foreign government bonds Less : Loss allowance Total	December 31, 2020 $ 28,507 - $ 28,507	December 31, 2019
		30,104 -
		30,104

The Company has assessed that these financial assets are held to maturity to collect contractual cash flows, which consist solely of payments of principal and interest on principal amount outstanding. Therefore, these investments were classified as financial assets measured at amortized cost.

• (i) For credit risk, please refer to note 6(t).

• (ii) Financial assets measured at amortized costs of the Company had not been pledged as collateral for long-term borrowings.

• (e) Notes receivable, accounts receivable, long-term notes and accounts receivable

Notes receivables – Merchandise Account receivables – Merchandise Less : Loss allowance	December 31, 2020 $ 117,543 646,808 - $ 764,351	December 31, 2019
		193,897 735,781 -
		929,678

The Company applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due, as well as incorporated forward looking information, including macroeconomic and relevant industry information. The loss allowance provision in Taiwan were determined as follows:

(Continued)

31

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

Current 1 to 30 days past due 31 to 60 days past due More than 60 days past due Current 1 to 30 days past due 31 to 60 days past due More than 60 days past due	December 31, 2020	December 31, 2020
	Gross carrying amount Expected loss rate $ 701,452 0% 9,156 0%~0.31% 18,005 0%~0.61% 35,738 0%~1% $ 764,351 December 31, 2019		Loss allowance provision
			- - - -
			-
		Expected loss rate 0%~0.01% 0%~0.55% 0%~0.86% 0%~1%	Loss allowance provision
			- - - -
			-

(f) Other receivables (including the long-term receivable)

Other receivables Property receivable Unrealized interest income Less : Loss allowance Other receivables Long-term receivables	December 31, 2020 $ 318,020 140,511 (14,335) (317,277) $ 126,919 $ 11,523 115,396 $ 126,919	December 31, 2019 323,393 162,239 (20,383) (317,277) 147,972 17,716 130,256 147,972

As of December 31, 2020, the total amount of receivables due to the sale of premises of the Company was $126,176 thousand, After the year 2021 and the year 2022, $10,780 and $115,396 thousand will be recovered respectively.

The above receivables of $126,176 thousand are all secured by the premises and promissory notes sold, and a mortgage is established to the Company.

(Continued)

32

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

The movement in the allowance for other receivables was as follows.

Balance on December 31 (Same as Balance on January 1)	For the years ended December 31	For the years ended December 31
	2020 $ 317,277	2019
		317,277

Note: Ending balances in 2020 and 2019 were the same as the beginning balances in 2020 and 2019.

For the explanation of individually assessed impairment, please refers to note 7; for other credit risk information, please refers to note 6(t).

(g) Inventories, construction in progress, land held for sale and receipts in advance

Inventories Raw materials Finished goods Merchandise Construction in progress Hsinchu land development project	December 31, 2020 $ 1,739,833 389,212 182 $ 2,129,227 $ 644,783	December 31, 2019
		1,329,721 419,077 325
		1,749,123
		644,783

The cost of inventories recognized as cost of goods sold and expense for the years ended December 31, 2020 and 2019, amounted to $6,631,474 and $8,849,526 thousand, respectively. For the years ended December 31, 2020 and 2019, the write-down of inventories to net realizable value both are not recognized.

As of December 31, 2020 and 2019, the aforesaid inventories were not pledged as collateral.

(h) Investments accounted for using equity method

Subsidiaries Associates	December 31, 2020 $ 2,839,585 9,282,092 $ 12,121,677	December 31, 2019
		2,301,527 9,400,297
		11,701,824

(i) Subsidiaries

Please refer to the consolidated financial report for the years ended December 31, 2020.

(Continued)

33

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

(ii) Associates

The Company’s financial information for equity accounted investees at the reporting date was as follows:

Material associates Al-Jubail Fertilizer Company (“Al-Jubail”) $ Associates that are not individually material MITAGRI Co., Ltd. Taiwan Agricultural Investment and Development Co., Ltd. $	December 31, 2020 9,202,183 32,881 47,028 9,282,092	December 31, 2019
		9,304,896 40,211 55,190
		9,400,297

Associates that had materiality were as follows:

Associate	Nature of relationship	Country of registration	Equity ownership
			December 31, 2020 December 31, 2019 % 50.00 % 50.00
AI-Jabail Fertilizer Company	Equity-method investee	Kingdom of Saudi Arabia

The following is a summary of financial information on the Company’s significant associates. In order to reflect the adjustments for fair value in acquisition of shares and differences in accounting policies, adjustment for the amounts presented on the financial statements of associates in accordance with IFRSs has been made to such financial information.

Summary financial information on AI-Jabail Fertilizer Company

Current assets Noncurrent assets Current liabilities Noncurrent liabilities Net assets Net assets attributable to non controlling interests Net assets attributable to investee owners	December 31, 2020 $ 6,628,334 15,110,337 (1,739,092) (840,436) $ 19,159,143 $ 9,405,861 9,753,282 $ 19,159,143	December 31, 2019 5,317,917 17,012,975 (2,313,795) (974,846) 19,042,251 9,250,058 9,792,193 19,042,251

(Continued)

34

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

		For the years ended	December 31
		2020	2019
Revenue	$	8,857,397	9,455,505
Profit for the year		1,565,731	1,641,322
Other comprehensive income		21,666	5,479
Comprehensive income	$	1,587,397	1,646,801
Comprehensive income attributable to non controlling	$	879,745	754,168
interests
Comprehensive income attributable to investee owners	$	707,652	892,633
Dividends declared by Associates	$	211,435	1,415,010

• (iii) Taiwan Yes Deep Ocean Water Co., Ltd., which was accounted for as acquisition using the equity method, did not meet the expected operation performance taoget. The Company assessed the decrease of future cash inflow would cause the recoverable amount less than the bookl value. The Company recognized impairment loss $0 and $12,891 thousand included in share of other compreensive income of subsidiaires, associates and joint ventures accounted for using equity method in statements of comprehensive income.

(iv) Collateral

As of December 31, 2020 and 2019, the investments in the aforesaid equity-accounted investees were not pledged as collateral.

• (i) Property, plant and equipment

The movements in the cost, depreciation, and impairment of the property, plant and equipment of the Group for the years ended December 31, 2020 and 2019 were as follows:

Cost or deemed cost: Balance on January 1, 2020 Additions Disposals Transfer from completion Balance on December 31, 2020 Balance on January 1, 2019 Additions Disposals Transfer to investment properties Transfer from completion Balance on December 31, 2019 Depreciation and impairment loss: Balance on January 1, 2020 Depreciation for the year Disposals Balance on December 31, 2020	Land $ 3,652,778 - - - $ 3,652,778 $ 3,652,778 - - - - $ 3,652,778 $ - - - $ -	Building and construction 3,749,688 14,606 - 88,011 3,852,305 3,604,872 19,401 (1,891) - 127,306 3,749,688 747,690 122,430 - 870,120	Machinery and equipment 9,379,379 79,407 (5,795) 96,542 9,549,533 9,019,442 129,545 (45,620) - 276,012 9,379,379 3,518,395 646,571 (5,781) 4,159,185	Transportation Equipment 85,716 1,519 (9,610) 4,545 82,170 84,681 484 (2,240) - 2,791 85,716 60,347 7,870 (9,610) 58,607	Other Equipment 419,170 6,914 (172) 4,765 430,677 409,108 8,129 (7,518) - 9,451 419,170 158,485 35,481 (172) 193,794	Construction in progress 294,491 118,293 - (193,863) 218,921 496,239 224,254 - (2,305) (423,697) 294,491 82,820 - - 82,820	Total 17,581,222 220,739 (15,577) -
							17,786,384
							17,267,120 381,813 (57,269) (2,305) (8,137)
							17,581,222
							4,567,737 812,352 (15,563)
							5,364,526

(Continued)

35

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

Balance on January 1, 2019 Depreciation for the year Disposals Transfer from completion Balance on December 31, 2019 Carrying amounts: Balance on December 31, 2020 Balance on January 1, 2019 Balance on December 31, 2019	Land $ - - - - $ - $ 3,652,778 $ 3,652,778 $ 3,652,778	Building and construction 635,327 114,897 (1,891) (643) 747,690 2,982,185 2,969,545 3,001,998	Machinery and equipment 2,942,333 625,554 (45,545) (3,947) 3,518,395 5,390,348 6,077,109 5,860,984	Transportation Equipment 54,709 7,870 (2,232) - 60,347 23,563 29,972 25,369	Other Equipment 132,254 33,682 (7,356) (95) 158,485 236,883 276,854 260,685	Construction in progress 82,820 - - - 82,820 136,101 413,419 211,671	Total 3,847,443 782,003 (57,024 (4,685
							4,567,737
							12,421,858
							13,419,677
							13,013,485

As of December 31, 2020 and 2019, the property, plant and equipment were not pledged as collateral.

(j) Right-of-use assets

The Company leases land. Information about leases for which the Company as a lessee is presented below:

Cost: Balance on December 31, 2020 Balance on December 31, 2019 Accumulated depreciation and impairment losses: Balance on January 1, 2020 Depreciation for the year Balance on December 31, 2020 Balance on January 1, 2019 Depreciation for the year Balance on December 31, 2019 Carrying amount: Balance on December 31, 2020 Balance on January 1, 2019 Balance on December 31, 2019	Land
	$ 1,321,931 $ 1,321,931 $ 99,955 99,896 $ 199,851 $ - 99,955 $ 99,955 $ 1,122,080 $ 1,321,931 $ 1,221,976

On October 31, 2006, the Company leased from the Taichung Harbor Bureau, Ministry of Transportation and Communications (“THB”) a 247.298 square meter lot in a special petrochemical industry zone in Taichung to develop wharf areas called wests 8 and 9, and construct warehouse facilities and public roads. The main provisions of the lease agreement were as follows:

• (i) The lease term for the land in a special industrial zone is 20 years, and the agreement is renewable until the total lease reaches 50 years.

(Continued)

36

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

• (ii) The Company can sublease the land, and it can also develop wests 8 and 9 of the wharf area, as well as construct warehouse facilities and public roads on behalf of THB. The Company can use its capital expenses for the construction as rentals in advance. However, once the lease term ends or the agreement is early terminated, all the titles to the facilities and improvements on the leased land should be transferred to THB.

The Company used its expenditures of $1,500,481 thousand for the construction of wests 8 and 9 of Taichung Harbor as rentals until March 20, 2034. The long-term prepayments for lease should be amortized over its rent free periods.

(k) Investment property

The Company for the Investment property were as follows:

Costs: Balance on January 1, 2020 Additions Disposals Reclassification Balance on December 31, 2020 Balance on January 1, 2019 Additions Transferred from property, plant and equipment Disposals Reclassification Balance on December 31, 2019 Amortization and Impairment Loss: Balance on January 1, 2020 Depreciation Reclassification Balance on December 31, 2020 Balance on January 1, 2019 Depreciation Balance on December 31, 2019 Balance on December 31, 2020 Balance on January 1, 2019 Balance on December 31, 2019 Fair value: Balance on December 31, 2020 Balance on December 31, 2019		Own assets	Undeveloped Investment Property 17,339,970 - (374,779) (43) 16,965,148 17,347,837 - - (7,421) (446) 17,339,970 607,646 - - 607,646 607,646 - 607,646 16,357,502 16,740,191 16,732,324	Right-of-use assets Other Total 3,778 37,039,730 - 2,515,774 - (374,779) - (43) 3,778 39,180,682 - 36,008,580 3,778 1,065,641 - 2,305 - (7,421) - (29,375) 3,778 37,039,730 - 974,356 1,259 112,171 839 - 2,098 1,086,527 - 863,156 - 111,200 - 974,356 1,680 38,094,155 - 35,145,424 3,778 36,065,374 $ 104,432,231 $ 96,182,489	Total 37,039,730 2,515,774 (374,779) (43)
	Completed Investment Property $ 10,972,209 13,457 - - $ 10,985,666 $ 10,998,676 157 2,305 - (28,929) $ 10,972,209 $ 288,719 92,559 (839) $ 380,439 $ 195,988 92,731 $ 288,719 $ 10,605,227 $ 10,802,688 $ 10,683,490	Investment Property under Construction 8,723,773 2,502,317 - - 11,226,090 7,662,067 1,061,706 - - - 8,723,773 77,991 18,353 - 96,344 59,522 18,469 77,991 11,129,746 7,602,545 8,645,782
					39,180,682
					36,008,580 1,065,641 2,305 (7,421) (29,375)
					37,039,730
					974,356 112,171 -
					1,086,527
					863,156 111,200
					974,356
					38,094,155
					35,145,424
					36,065,374

Completed investment property are located in C3/C6/C7/C8/C9 in the Nangang Economic and Trade Park, and the Corporation leased land use right to others.

(Continued)

37

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

• (i) The main provisions of the C6/C7/C8/C9 contract on the pledging of land use rights were as follows:

• 1) Land use rights are for 50 years from the date of registration of these rights.

• 2) The land use rights (accounted for as deferred income-current and noncurrent) amounted to $3,200,889 thousand, which has been treated as royalty revenue (accounted for as operating revenue) amortizable over 50 years from June 13, 2006. As of December 31, 2020 and 2019, the unamortized balances of the land used rights under above mentioned contract were $2,269,964 and $2,333,981 thousand, respectively.

• 3) In addition to the land use right, the annual rental payable by the lessee is 8% of the reference land price announced by the local government, with the calculation starting from the contract date. When the reference land price is adjusted, the annual rental will be revised at the percentage the same as that set on the date of the reference price adjustment. The annual rentals in 2020 and 2019 were $339,220 and $328,151 thousand, respectively.

• (ii) On September 15, 2015, the Corporation signed with CTBC Life Insurance Co., Ltd. and Taiwan Life Insurance Co., Ltd. (together, the “ lessees” ) separate contracts for these two insurance companies to have the rights to use land located in C3 in the Nangang Economic and Trade Park. The main provisions of these contracts are as follows:

• 1) Land use rights (LURs) are valid for 45 years from the date of the registration of these rights.

• 2) The LURs (accounted for as deferred income - current and noncurrent) amounted to $14,288,705 thousand, which has been treated as royalty revenue (under operating revenue) amortizable over 45 years from December 10, 2015. As of December 31, 2020 and 2019, the unamortized balance of the LURs were $12,683,431 and $13,000,957 thousand, respectively.

• 3) In addition to the LURs, the annual rental payable by the lessees is 0.8% of the reference land price announced by the local government, with the calculation starting from the registration date. When the reference land price is adjusted, the annual rental will be revised at the same percentage as the rate of the reference price adjustment. The lessees’ annual rental in 2020 and 2019 were both $46,754 and $45,009 thousand.

• 4) After nine years and six months from the registration date, the lessees have within six months to extend the validity period for the land use rights to another 40 years by giving a written notice to the Corporation. With this extension, the entire validity period of the LURs will be 85 years, and the lessees should pay an additional one-time royalty of $15,000,000 thousand.

(Continued)

38

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

5) Under the contract, the lessees provided the Taiwan Government Bond A02105 and A03114 as collaterals; the fair values of these bonds were as follow:

Balance on December 31, 2020 Balance on December 31, 2019 Balance on January 1, 2019	The Taiwan Government Bond A02105 $ 1,211,269 $ 1,173,011 $ 1,086,786	The Taiwan Government Bond A03114
		1,760,699
		1,691,012
		1,596,767

(iii) Investment properties under construction are located in Hsinchu City and Hualien City and included land for the “C2 Tourist Hotel Project” and “Commercial Building Project” in the Nangang Economic and Trade Park. The C2 Tourist Hotel Project was won by the Grand Hi Lai Hotel Co., Ltd. and the Caesar Park Hotel Co., Ltd., who both signed a front-end agreement (FEA) on December 31, 2013, with the contract for C2 Tourist Hotel Project signed under lease agreement with the Grand Hi Lai Hotel Co., Ltd. for the development of the C2 Tourist Hotel, and the termination agreement signed with Caesar Park Hotel Co., Ltd. based on the resolution approved during the board meeting of the Company held on March 28, 2019. The related termination procedures were still in progress.

In addition, the bid for the C2 Commercial Building Project was won by Dung Jeng Investment Co., Ltd. (“Dung Jeng”), in which the Company will construct a building and parking space for Dung Jeng. The lease contract was signed on January 30, 2015, with a lease period of 20 years from the completion of the building and parking space. The termination agreement with the Dung Jeng Investment Co., Ltd. had been approved during the board meeting of the Company held on March 28, 2019. The related termination procedures were still in progress.

The construction licenses for C2 Hotel and Commercial Building Projects have been obtained, wherein they are allowed to engage in engineering works such as steel structure and curtain wall, at a total investment amount of $2,497,316 thousand, of which, the amount of $5,130,021 thousand had been currently invested.

The fair value of investment properties (as measured or disclosed in the consolidated financial statements) was based on a valuation by a qualified independent appraiser who has recent valuation experience in the location and category of the investment property being valued. The inputs of levels of fair value hierarchy in determining the fair value was classified to Level 3.

The fair values of investment properties were assessed as follows:

C6／ C7／ C8／ C9 C2 C3 Hsinchu Kaohsiung	December 31, 2020 $ 24,232,441 $ 20,377,824 $ 35,935,442 $ 5,512,070 $ 18,374,454	December 31, 2019
		22,746,927
		18,544,519
		32,165,990
		5,434,878
		17,290,175

(Continued)

39

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

The fair values were based on the valuations carried out at April 20, 2020 and April 10, 2019 by independent qualified professional valuer.

The fair value is measured at market value, mainly use the comparison approach and land development analysis approach to determine the value of the investment property. The weight is 50/50. The significant key assumption of the development profit margin intervals was as follows:

Area C6/C7/C8/C9 C2 C3 HsinChu KaoHsiung	For the years ended December 31
	2020 2019 18% 18% 18% 16% 18% 18% 16% 16% 17% 16%

The other investment properties held by the Corporation are mainly located in different industrial zones. They have no quoted prices in an active market and there was no alternative basis for estimating their fair values. Thus, the fair values of the investment properties were not reliably determinable.

As of December 31, 2020 and 2019 investment properties were not pledged as collateral.

(l) Operating leases

The Company leases out its investment property and some machinery. The Company has classified these leases as operating leases, because it does not transfer substantially all of the risks and rewards incidental to the ownership of the assets. Please refer to note 6(k) sets out information about the operating leases of investment property.

A maturity analysis of lease payments, showing the undiscounted lease payments to be received after the reporting date are as follows:

Less than one year One to two years Two to three years Three to four years Four to five years More than five years Total undiscounted lease payments	December 31, 2020 $ 765,379 730,185 661,772 610,563 601,123 12,784,992 $ 16,154,014	December 31, 2019
		742,946 727,303 678,420 626,341 599,946 12,929,393
		16,304,349

For the years ended December 31, 2020 and 2019, the property rental income was $759,623 and $711,967 thousand, respectively. There were no significant property equipment and maintenance expenses.

(Continued)

40

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

(m) Employee benefits

(i) Defined benefit plans

Reconciliation of defined benefit obligation at present value and plan asset at and fair value are as follows:

Present value of defined benefit obligation Fair value of plan assets The effect of the asset ceiling Net defined benefit liabilities	December 31, 2020 $ 507,524 (376,205) 131,319 - $ 131,319	December 31, 2019 521,197 (413,711) 107,486 - 107,486

The Company makes defined benefit plan contributions to the pension fund account with Bank of Taiwan that provides pension benefits for employees upon retirement. Plans (covered by the Labor Standards Law) entitle a retired employee to receive retirement benefits based on years of service and average monthly salary for the six months prior to retirement.

1) Composition of plan assets

The Company set aside pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund and such funds are managed by the Bureau of Labor Funds, Ministry of Labor. Under these regulations, the minimum earnings from these pension funds shall not be less than the earnings from two-year time deposits with the interest rates offered by local banks.

The Company’ s Bank of Taiwan labor pension reserve account balance amounted to $376,205 thousand as of December 31, 2020. For information on the utilization of the labor pension fund assets including the asset allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

(Continued)

41

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

• 2) Movements in present value of the defined benefit obligations

The movements in the present value of the defined benefit obligations for the years ended December 31, 2020 and 2019 were as follows:

Defined benefit obligation, January 1 Current service costs and interest Re-measurement of the net defined benefit liability －Actuarial (losses) gains arose from changes in demographic assumptions －Actuarial gains arose from changes in financial assumption －Experience adjustment Benefits paid Defined benefit obligation, December 31	For the years ended December 31 2020 2019 $ 521,197 520,510 18,210 19,289 - 1 12,665 3,204 37,470 17,657 (82,018) (39,464) $ 507,524 521,197
	2020 $ 521,197 18,210 - 12,665 37,470 (82,018) $ 507,524

3) Movements in the fair value of plan assets

The movements in the fair value of the defined benefit plan assets for the years ended December 31, 2020 and 2019 were as follows:

December 31, 2020 and 2019 were as follows:
	For	the years ended	December 31
		2020	2019
Fair value of plan assets, January 1	$	413,711	406,263
Interests revenue		2,452	2,883
Re-measurement of the net defined benefit liability
－Experience adjustment		14,319	16,464
Contributions made		13,975	27,565
Benefits paid		(68,252)	(39,464)
Fair value of plan assets, December 31	$	376,205	413,711

4) Movements in the fair value of plan assets : None

(Continued)

42

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

5) Expenses recognized in profit or loss

The Company’ s pension expenses recognized in profit or loss for the years ended December 31, 2020 and 2019 were as follows:

Current service cost Net interest of net liabilities for defined benefit obligations Operating costs Operating expenses	For the years ended December 31	For the years ended December 31
	2020 $ 15,115 643 $ 15,758 $ 10,196 5,562 $ 15,758	2019
		15,616 790
		16,406
		10,458 5,948
		16,406

• 6) Re-measurement of net defined benefit liability recognized in other comprehensive income

The Company’s net defined benefit liability recognized in other comprehensive income for the years ended December 31, 2020 and 2019 were as follows:

Cumulative amount, January 1 Recognized during the year Cumulative amount, December 31	For the years ended December 31	For the years ended December 31
	2020 $ 100,436 28,653 $ 129,089	2019
		96,918 3,518
		100,436

• 7) Actuarial assumptions

The following were the key actuarial assumptions at the reporting date:

The principal actuarial assumptions at the reporting date were as follows:

Discount rate Future salary increases	2020.12.31 2019.12.31 % 0.25 % 0.65 % 1.50 % 1.50

The expected allocation payment to be made by the Company to the defined benefit plans for the one-year period after the reporting date is $16,256 thousand.

The weighted-average duration of the defined benefit plan is 6 year.

(Continued)

43

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

8) Sensitivity Analysis

As of December 31, 2020 and 2019, the changes in the principal actuarial assumptions will impact on the present value of defined benefit obligation as follows:

December 31, 2020 Discount rate Future salary increase rate December 31, 2019 Discount rate Future salary increase rate	Impact on the present value of defined benefit obligation Increase by 0.25% Decrease by 0.25% (7,988) 8,237 8,114 (7,910) (7,936) 8,186 8,096 (7,890)

The sensitivity analysis assumed all other variables remain constant during the measurement. This may not be representative of the actual change in defined benefit obligation as some of the variables may be correlated in the actual situation. The model used in the sensitivity analysis is the same as the defined benefit obligation liability.

The analysis is performed on the same basis for prior year.

(ii) Defined contribution plans

The Company contributes an amount at the rate of 6% of the employee’s monthly wages to the Labor Pension personal account with the Bureau of the Labor Insurance and Council of Labor Affairs in R.O.C. in accordance with the provisions of the Labor Pension Act. The Company’s contributions to the Bureau of the Labor Insurance and Social Security Bureau for the employees’ pension benefits require no further payment of additional legal or constructive obligations.

As of December 31, 2020 and 2019, the expense of defined contribution plans under Labor Pension Act was as follows:

Pension Act was as follows:
Operating costs Operating expenses	For the years ended December 31
	2020 $ 12,587 9,438 $ 22,025	2019
		11,193 9,469
		20,662

The cost of the pension contributions to the Labor Insurance Bureau for the years ended December 31, 2020 and 2019 amounted to $17,114 and $18,464 thousand, respectively

(Continued)

44

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

(iii) Short-term employee benefits

short term employee benefit liabilities	December 31, 2020 $ 11,899	December 31, 2019 9,347

(n) Income tax

(i) The components of income tax in the years 2020 and 2019 were as follows:

Current income tax expense Current period incurred 10% surtax on undistributed earnings Land value increment tax Prior years income tax adjustment Deferred tax expense Origination and reversal of temporary differences Land value increment tax Income tax expense	For the years ended December 31	For the years ended December 31
	2020 $ 290,143 - 202,496 5,491 498,130 81,990 (68,818) 13,172 $ 511,302	2019 403,496 309 108,634 (2,635) 509,804 (89,256) (21,296) (110,552) 399,252

The amount of income tax recognized in other comprehensive income for 2020 and 2019 was as follows:

Items that will not be reclassified to profit or loss: Remeasurements effects of defined benefit plans $ Items that may be reclassified subsequently to profit and loss: Foreign currency translation differences for foreign operations $	For the years ended December 31 2020 2019 (7,163) (879) (101,288) (39,297)
	2020 (7,163) (101,288)

(Continued)

45

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

Reconciliation of income tax and for 2020 and 2019 as follows:

Profit excluding income tax Income tax using the Company’s domestic tax rate Non-deductible income tax Tax-exempt income Land value increment tax Overestimate and underestimate of previously income tax Undistributed earnings additional tax Others Income tax expense	For the years ended December 31 2020 2019 $ 2,964,183 2,463,207 592,837 492,641 2,133 4,414 (219,078) (179,386) 133,678 87,338 5,491 (2,635) - 309 (3,759) (3,429) $ 511,302 399,252	For the years ended December 31 2020 2019 $ 2,964,183 2,463,207 592,837 492,641 2,133 4,414 (219,078) (179,386) 133,678 87,338 5,491 (2,635) - 309 (3,759) (3,429) $ 511,302 399,252
	2020 $ 2,964,183 592,837 2,133 (219,078) 133,678 5,491 - (3,759) $ 511,302
		2,463,207 492,641 4,414 (179,386) 87,338 (2,635) 309 (3,429) 399,252

• (ii) Deferred tax assets and liabilities

• 1) Recognized deferred tax assets and liabilities

The movements in deferred tax assets and liabilities for the years ended December 31, 2020 and 2019 were as follows:

Deferred tax liabilities:

Balance on January 1, 2020 Recognized in profit or loss Balance on December 31, 2020 Balance on January 1, 2019 Recognized in profit or loss Recognized in other comprehensive income Balance on December 31, 2019	Land value increment tax $ 6,363,202 (68,818) $ 6,294,384 $ 6,384,498 (21,296) - $ 6,363,202	Investment income recognized under the equity method 625,386 85,915 711,301 697,551 (72,165) - 625,386	Exchange difference on the translation of foreign operations 72,592 - 72,592 111,718 - (39,126) 72,592	Others 27,984 (1,537) 26,447 24,711 3,273 - 27,984	Total 7,089,164 15,560
					7,104,724
					7,218,478 (90,188) (39,126)
					7,089,164

Deferred tax assets:

Balance on January 1, 2020 Recognized in profit or loss Recognized in other comprehensive income Balance on December 31, 2020 Balance on January 1, 2019 Recognized in profit or loss Recognized in other comprehensive income Balance on December 31, 2019	Unamortized manufacturing costs $ 55,900 10,259 - $ 66,159 $ 44,513 11,387 - $ 55,900	Defined benefit obligation 24,237 - 7,163 31,400 22,594 764 879 24,237	Impairment loss on assets 63,456 - - 63,456 63,456 - - 63,456	Exchange difference on the translation of foreign operations 379 - 101,288 101,667 208 - 171 379	Others 30,759 (7,871) - 22,888 22,546 8,213 - 30,759	Total
						174,731 2,388 108,451
						285,570
						153,317 20,364 1,050
						174,731

(Continued)

46

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

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

(o) Share capital and other interests

(i) Share capital

As of December 31, 2020 and 2019, the authorized capital of the Company amounting to $9,800,000 with par value of $10 per share. The paid in capital was $9,800,000 thousands, and the capital that rose from the shares had all been retrieved.

(ii) Capital surplus

The components of capital surplus were as follows:

Donations Treasury share transactions Others	December 31, 2020 $ 44,803 2,187,988 11,861 $ 2,244,652	December 31, 2019
		44,803 2,187,988 11,282
		2,244,073

In accordance with Amended Companies Act 2012, realized capital reserves can only be capitalized or distributed as cash dividends after offsetting against losses. The aforementioned capital reserves include share premiums and donation gains. In accordance with Securities Offering and Issuance Guidelines, the amount of capital reserves that can be capitalized shall not exceed 10 percent of the actual share capital amount.

(iii) Retained earnings

Under the dividend policy as set forth in the Articles, where the Corporation made profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit, setting aside or reversing a special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings shall be used by the Corporation’s board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for distribution of dividends and bonus to shareholders.

To determine dividend amounts, the Corporation should take into account the diversity of its business, cycles of the industry, and capital demand in relation to specific products and services. To balance business development and shareholders’ welfare, the cash dividend should not be less than 10% of total annual dividends, unless there is any capital demand due to essential investment plan, change in financial position, business operation, extension of capacity or any other capital expenditure and should be approved in the shareholders’ meetings.

(Continued)

47

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

1) Legal reserve

If the Company earned a profit for the year, the meeting of shareholders decides on the distribution of the statutory earnings reserve either by issuing new shares or by paying cash, and the distribution is limited to the portion of legal reserve which exceeds 25 percent of the actual share capital.

2) Special reserve

The Company implemented the optional exemptions under IFRS 1 "First-time Adoption of International Financial Reporting Standards” when adopting the International Financial Reporting Standards at first time. The increase in retained earnings resulting from the unrealized revaluation increments, cumulative translation adjustment and the revaluation increments in the transfer from fix assets to investment property was $32,114,341 thousand. In accordance with Ruling No. 1010012865 issued by the FSC on April 6, 2012, the same amount of the increasing earnings shall be reclassified to special earnings reserve. If a certain proportion of the asset has been disposed or reclassified, the same proportion of special earnings reserve equivalent to that of the asset, which has been disposed or reclassified, has to be transferred back to its earnings. Such special earnings reserve has to have the same amount with the one that was initially being reclassified to its special earnings reserve. The balance of such special earnings reserve amounted to $30,409,839 and $30,734,041 thousand as of December 31, 2020 and 2019, respectively.

In accordance with the aforesaid Ruling, a special reserve is set aside from the current year’s net income after tax and prior year’s undistributed earnings at an amount equal to the debit balance of contra accounts in shareholders’ equity. When the debit balance of any of these contra accounts in shareholders’ equity is reversed, the related special reserve can be reversed. The subsequent reversals of the contra accounts in shareholders' equity shall quality for additional distributions.

3) Earnings distribution

Earnings distribution for 2019 and 2018 was decided via the general meeting of shareholders held on 22 June 2020 and 20 June 2019, respectively. The relevant dividends distributions to shareholders were as follows:

Dividends distributed to ordinary shareholders: Cash	2019	2019	2019	2018 Amount per share (dollars) Amount 2.20 2,156,000	2018 Amount per share (dollars) Amount 2.20 2,156,000
	Amount per share (dollars)		Amount		Amount
	$ 2.20		2,156,000		2,156,000

(Continued)

48

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

On March 25, 2021, the Company’s Board of Directors resolved to appropriate the 2020 earnings. These earnings were appropriated as follows:

Dividends distributed to ordinary shareholders: Cash	For the year ended December 31	For the year ended December 31
	2020
	Amount per share (dollars) $ 2.3	Amount
		2,254,000

(iv) Other equity accounts (net of tax)

Balance on January 1, 2020 Exchange differences on subsidiaries accounted for using equity method Unrealized gains from financial assets measured at fair value through other comprehensive income Balance on December 31, 2020 Balance on January 1, 2019 Exchange differences on subsidiaries accounted for using equity method Unrealized gains from financial assets measured at fair value through other comprehensive income Balance on December 31, 2019	Exchange differences on translation of foreign financial statements $ (51,551) (411,089) - $ (462,640) $ 109,064 (160,615) - $ (51,551)	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income 1,398,701 - 715,107 2,113,808 1,203,593 - 195,108 1,398,701	Total 1,347,150 (411,089) 715,107 1,651,168 1,312,657 (160,615) 195,108
			1,347,150

(p) Earnings per share

The basic earnings per share and diluted earnings per share were calculated as follows:

Basic earnings per share Profit attributable to ordinary shareholders Weightedaverage number of ordinary shares	For the years ended December 31	For the years ended December 31
	2020 $ 2,452,881 980,000 $ 2.50	2019
		2,063,955
		980,000
		2.11

(Continued)

49

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

Diluted earnings per share Profit attributable to ordinary shareholders (diluted) Weightedaverage number of ordinary shares Effect of potentially dilutive ordinary shares Employees’ compensation Weightedaverage number of ordinary shares (diluted)	For the years ended December 31	For the years ended December 31
	2020 $ 2,452,881 980,000 1,711 981,711 $ 2.50	2019
		2,063,955
		980,000 1,963
		981,963
		2.10

(q) Revenue from contracts with customers

(i) Details of revenue

The details of revenue were as follows:

Revenue from contracts with customers Revenue from investment properties Property revenue Other operating revenue	For the years ended December 31	For the years ended December 31
	2020 $ 8,218,525 1,586,529 - 126,075 $ 9,931,129	2019 9,938,161 1,596,074 1,036,607 53,874 12,624,716

(ii) Disaggregation of revenue

Primary geographical markets Taiwan Middle East Others Major products/services lines Fertilizers and other chemical products Lease Others	For the year ended December 31, 2020	For the year ended December 31, 2020	For the year ended December 31, 2020	For the year ended December 31, 2020
	Fertilizers and other chemical products $ 7,547,680 264,938 405,907 $ 8,218,525 $ 8,218,525 - - $ 8,218,525	Real estate property and investment 1,586,529 - - 1,586,529 - 1,586,529 - 1,586,529	Others 126,075 - - 126,075 - - 126,075 126,075	Total
				9,260,28 264,93 405,90
				9,931,12
				8,218,52 1,586,52 126,07
				9,931,12

(Continued)

50

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

Primary geographical markets Taiwan Middle East Others Major products/services lines Fertilizers and other chemical products Lease Rental revenue Others Contract balances Accounts receivable Less: allowance for impairment Total Contract liabilities-Chemical fertilizers product Contract liabilities- Property revenue Total	For the year ended December 31, 2019 Fertilizers and other chemical products Real estate property and investment Others Total $ 7,959,617 2,632,681 53,874 10,646,172 1,469,202 - - 1,469,202 509,342 - - 509,342 $ 9,938,161 2,632,681 53,874 12,624,716 $ 9,938,161 - - 9,938,161 - 1,596,074 - 1,596,074 - 1,036,607 - 1,036,607 - - 53,874 53,874 $ 9,938,161 2,632,681 53,874 12,624,716 December 31, 2020 December 31, 2019 January 1, 2019 $ 764,351 929,678 1,210,486 - - - $ 764,351 929,678 1,210,486 $ 83,449 106,194 90,918 - - 76,212 $ 83,449 106,194 167,130	For the year ended December 31, 2019 Fertilizers and other chemical products Real estate property and investment Others Total $ 7,959,617 2,632,681 53,874 10,646,172 1,469,202 - - 1,469,202 509,342 - - 509,342 $ 9,938,161 2,632,681 53,874 12,624,716 $ 9,938,161 - - 9,938,161 - 1,596,074 - 1,596,074 - 1,036,607 - 1,036,607 - - 53,874 53,874 $ 9,938,161 2,632,681 53,874 12,624,716 December 31, 2020 December 31, 2019 January 1, 2019 $ 764,351 929,678 1,210,486 - - - $ 764,351 929,678 1,210,486 $ 83,449 106,194 90,918 - - 76,212 $ 83,449 106,194 167,130	For the year ended December 31, 2019 Fertilizers and other chemical products Real estate property and investment Others Total $ 7,959,617 2,632,681 53,874 10,646,172 1,469,202 - - 1,469,202 509,342 - - 509,342 $ 9,938,161 2,632,681 53,874 12,624,716 $ 9,938,161 - - 9,938,161 - 1,596,074 - 1,596,074 - 1,036,607 - 1,036,607 - - 53,874 53,874 $ 9,938,161 2,632,681 53,874 12,624,716 December 31, 2020 December 31, 2019 January 1, 2019 $ 764,351 929,678 1,210,486 - - - $ 764,351 929,678 1,210,486 $ 83,449 106,194 90,918 - - 76,212 $ 83,449 106,194 167,130
	$ $ $ $
			1,210,486 -
			1,210,486
			90,918 76,212
			167,130

(iii) Contract balances

For details on accounts receivable and allowance for impairment, please refer to note 6(e).

The amount of revenue recognized for the years ended December 31, 2020 and 2019 that was included in the contract liability balance at the beginning of the period were $100,123 and $154,511 thousand.

• (r) Remuneration to employees, directors and supervisors

In accordance with the articles of incorporation the Company should contribute no less than 2.4% of the profit as employee compensation and less than 1.6% as directors’ and supervisors’ remuneration when there is profit for the year. However, if the Company has accumulated deficits, the profit should be reserved to offset the deficit.

(Continued)

51

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

For the years ended December 31, 2020 and 2019, the Company estimated its employee remuneration amounting to $74,105 and $61,580 thousand, and directors’ remuneration amounting to $49,403 and $41,054 thousand, respectively. The estimated amounts mentioned above are calculated based on the net profit before tax, excluding the remuneration to employees and directors of each period, multiplied by the percentage of remuneration to employees and directors as specified in the Company’s articles. These remunerations were expensed under operating costs or operating expenses during 2020 and 2019. The numbers of shares to be distributed for 2020 and 2019 were calculated based on the closing price of the Company’s ordinary shares, one day before the date of the meeting of Board of Directors.

There was no difference of Employee compensation and directors’ remuneration between the amounts recognized on financial statements and actual distributed amount.

Information on remuneration to employees and directors resolved by the Corporation’ s board of directors in 2020 and 2019 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

• (s) Non operating income and expenses

• (i) Interest income

The details of interest income for the years ended December 31, 2020 and 2019 were as follows:

follows:
Interest income - bank deposits Other interest income	For the years ended December 31
	2020 $ 35,304 2,380 $ 37,684	2019
		71,249 3,955
		75,204

• (ii) Other income

The details of other income for the years ended December 31, 2020 and 2019 were as follows:

Dividends Others		For the years ended December 31	For the years ended December 31
			2019
			41,806 34,564
			76,370

(Continued)

52

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

(iii) Other gains and losses

The details of other gains and losses for the years ended December 31, 2020 and 2019 were as follows:

Gain (loss) on disposal of property, plant and equipment Gain on disposal of investment properties Net foreign exchange gain and (loss) Gain on financial assets at fair value through profit or loss Donation expenses & relevane withholding tax Others	For the years ended December 31 2020 2019 $ 1,025 (21) 1,047,961 15,405 1,635 (11,953) 5,065 9,926 (10,075) (19,532) (25,274) (28,440) $ 1,020,337 (34,615)
	2020 $ 1,025 1,047,961 1,635 5,065 (10,075) (25,274) $ 1,020,337

(iv) Finance costs

The details of finance costs for the years ended December 31, 2020 and 2019 were as follows:

Bank interest expense Lease interest	For the years ended December 31	For the years ended December 31
	2020 $ 1 3,580 $ 3,581	2019
		- 4,089
		4,089

(t) Financial instruments

• (i) Credit risk

1) Exposure to credit risk

The carrying amount of financial assets represents the Company’ s maximum credit exposure.

2) Credit risk concentrations

The clients of the Company are widely spread and unrelated; thus, credit risk is limited.

3) Receivables and debt securities

For credit risk exposure of notes and trade receivables, please refer to note 6(e).

Other financial assets at amortized cost includes other receivables, investments in government bonds, corporate bonds and time deposits

(Continued)

53

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

Debt investments at fair value through other comprehensive income include government bonds, listed and unlisted debt securities.

All of these financial assets are considered to have low risk, and thus, the impairment provision recognized during the period was limited to 12 months expected credit losses.

The movement in the allowance for impairment during the years ended December 31, 2020 and 2019, please refer to note 6(e) and 6(f).

(ii) Liquidity risk

The following are the contractual maturities of financial liabilities, excluding estimated interest payment and the impact of netting agreements.

December 31, 2020 Non-derivative financial liabilities Noninterestbearing liabilities Lease liabilities December 31, 2019 Non-derivative financial liabilities Noninterestbearing liabilities Lease liabilities	Carrying amount	1-3 months 1,025,582 30,825 1,056,407 1,151,988 30,825 1,182,813	1-5 years 280,161 118,647 398,808 250,609 119,946 370,555	More than 5 years
	$ 1,305,743 174,078 $ 1,479,821 $ 1,402,597 204,903 $ 1,607,500			- 24,606
				24,606
				- 54,132
				54,132

The Company does not expect the cash flows included in the maturity analysis to occur significantly earlier or at significantly different amounts.

• (iii) Market risk

1) Currency risk

The following are the contractual maturities of financial liabilities, excluding estimated interest payment and the impact of netting agreements.

Financial assets Monetary items USD：NTD Non-monetary items Investments accounted for using equity SAR：NTD USD：NTD	December 31, 2020	December 31, 2020	December 31, 2020	December 31, 2019 Foreign Currency Exchange Rate NTD 42,294 30.11 1,273,303 1,159,125 8.03 9,304,896 1,086 30.11 32,695	December 31, 2019 Foreign Currency Exchange Rate NTD 42,294 30.11 1,273,303 1,159,125 8.03 9,304,896 1,086 30.11 32,695
	Foreign Currency $ 6,812 1,210,587 1,127	Exchange Rate 28.51 7.60 28.51	NTD		Exchange Rate NTD 30.11 1,273,303 8.03 9,304,896 30.11 32,695
			194,196 9,202,183 32,133

(Continued)

54

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

Financial liabilities Monetary items USD：NTD	December 31, 2020	December 31, 2020	December 31, 2020	December 31, 2019 Foreign Currency Exchange Rate NTD 7,818 30.11 235,381	December 31, 2019 Foreign Currency Exchange Rate NTD 7,818 30.11 235,381
	Foreign Currency -	Exchange Rate -	NTD		Exchange Rate NTD 30.11 235,381
			-

2) Sensitivity analysis

The Company’ s exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, accounts receivable, other receivables, loans, accounts payable and other payables that are denominated in foreign currency. A 10% of appreciation of each major foreign currency against the Company’s functional currency as of December 31, 2020 and 2019 would have increased or decreased the before tax net income by $15,536 and $83,034 thousand, respectively. The analysis is performed on the same basis for both periods.

As the Company deals in diverse foreign currencies, gains or losses on foreign exchange were summarized as a single amount. For the years ended December 31, 2020 and 2019, the foreign exchange losses, including both realized and unrealized, amounted to 1,635 and (11,953) thousand, respectively.

(iv) Interest rate analysis

The interest risk exposure from financial assets and liabilities has been disclosed in the note of liquidity risk management.

The sensitivity analysis below is based on the exposure to equity price risks at the end of the reporting period. For floating-rate liabilities, the analysis is based on the assumption that the amount of liabilities outstanding on the reporting date is circulated throughout the year.

If interest rates had been 1 basis point higher/lower and all other variables were held constant, the Corporation’s pre-tax (loss) profit for the years ended December 31, 2020 and 2019 would decrease/increase by $0 due to the Company’ s cash and cash equivalents balances which exceeds its loan amount.

(v) Other price risk

If the stock price changes at the reporting date, the changes in other comprehensive income of the Company are estimated as follows: (The analysis was made on the same basis for both periods, assuming that all other variables remain constant and any impact to forecasted sales and purchases was ignored):

Equity price at the end of the reporting period Increase 5% Decrease 5%	For the years ended December 31 2020 2019 Comprehensive Income (Loss)(net of tax) Net Income (Loss) (net of tax) Comprehensive Income (Loss)(net of tax Net Income (Loss) (net of tax) $ 141,237 52,001 102,882 62,407 $ (141,237) (52,001) (102,882) (62,407)	For the years ended December 31 2020 2019 Comprehensive Income (Loss)(net of tax) Net Income (Loss) (net of tax) Comprehensive Income (Loss)(net of tax Net Income (Loss) (net of tax) $ 141,237 52,001 102,882 62,407 $ (141,237) (52,001) (102,882) (62,407)
	2020
	Comprehensive Income (Loss)(net of tax) $ 141,237 $ (141,237)	Net Income (Loss) (net of tax)
		52,001

(Continued)

55

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

(vi) Fair value of financial instruments

• 1) Categories and fair value of financial instruments

The fair value of financial assets and liabilities at fair value through profit or loss, and financial assets at fair value through other comprehensive income (available for sale financial assets) is measured on a recurring basis. The carrying amount and fair value of the Company’ s financial assets and liabilities, including the information on fair value hierarchy were as follows; however, except as described in the following paragraphs, for financial instruments not measured at fair value whose carrying amount is reasonably close to the fair value, and for equity investments that has no quoted prices in the active markets and whose fair value cannot be reliably measured, disclosure of fair value information is not required:

Financial assets at fair value through profit or loss Non derivative financial assets mandatorily measured at fair value through profit or loss Financial assets at fair value through other comprehensive income Domestic stocks in listed companies Unquoted equity instruments at fair value Total Financial assets measured at amortized cost Government bonds Cash and cash equivalents Other financial assets (including non- current) Notes receivable and accounts receivables Other receivables (including long-term) Refundable deposit Total Total Financial liabilities at amortized cost Notes and accounts payable Other payables Lease liabilities (including non-current) Refundable deposit Total Total		December 31, 2020	December 31, 2020	December 31, 2020
	Book Value $ 1,300,013 $ 112,566 2,712,178 2,824,744 $ 28,507 2,521,222 1,059,188 764,351 126,919 20,020 4,520,207 $ 8,644,964 $ 464,348 561,234 164,257 280,161 1,470,000 $ 1,470,000		Fair Value
		Level 1 1,300,013 112,566 - 112,566 - - - - - - - 1,412,579 - - - - - -	Level 2 - - - - 28,214 - - - - - 28,214 28,214 - - - - - -	Level 3 - - 2,712,178 2,712,178 - - - - - - - 2,712,178 - - - - - -	Total 1,300,013
					112,566 2,712,178
					2,824,744
					28,214 - - - - -
					28,214
					4,152,971
					- - - -
					-
					-

(Continued)

56

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

Financial assets at fair value through profit or loss Non derivative financial assets mandatorily measured at fair value through profit or loss Financial assets at fair value through other comprehensive income Domestic stocks in listed companies Unquoted equity instruments at fair value Total Financial assets measured at amortized cost Government bonds Cash and cash equivalents Other financial assets (including non- current) Notes receivable and accounts receivables Other receivables (including long-term) Refundable deposit Total Total Financial liabilities at amortized cost Notes and accounts payable Other payables Lease liabilities (including non-current) Refundable deposit Total Total		December 31, 2019	December 31, 2019	December 31, 2019
	Book Value $ 1,560,181 $ 94,691 1,962,947 2,057,638 $ 30,104 1,678,358 4,284,292 929,678 147,972 50,491 7,120,895 $ 10,738,714 $ 626,456 525,532 191,502 250,609 1,594,099 $ 1,594,099		Fair Value
		Level 1 1,560,181 94,691 - 94,691 - - - - - - - 1,654,872 - - - - - -	Level 2 - - - - 30,034 - - - - - 30,034 30,034 - - - - - -	Level 3 - - 1,962,947 1,962,947 - - - - - - - 1,962,947 - - - - - -	Total 1,560,181
					94,691 1,962,947
					2,057,638
					30,034 - - - - -
					30,034
					3,647,853
					- - - -
					-
					-

• 2) Valuation techniques for financial instruments not measured at fair value

The Company’s valuation techniques and assumptions used for financial instruments not measured at fair value are as follows:

• a) Financial assets measured at amortized cost (held to maturity financial assets)

If the quoted prices in active markets are available, the market price is established as the fair value. However, if quoted prices in active markets are not available, the estimated valuation or prices used by competitors are adopted.

(Continued)

57

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

• b) Financial assets measured at amortized cost (debt investment that has no active markets) and financial liabilities measured at amortized cost

If there is quoted price generated by transactions, the recent transaction price and quoted price data is used as the basis for fair value measurement. However, if no quoted prices are available, the discounted cash flows are used to estimate fair values.

• 3) Valuation techniques for financial instruments measured at fair value:

• a) Non-derivative financial instruments

When a financial instrument is regarded as quoted in an active market, the quoted prices in an active market will be the fair value. The market prices from the main exchanges and government bond exchanges are the basis of the fair value of OTC equity instruments and debt instruments which have a quoted market price in an active market.

A financial instrument is regarded as being quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm’s-length basis. Quoted market prices may not be indicative of the fair value of an instrument if the activity in the market is infrequent, the market is not well-established, only small volumes are traded, or bid-ask spreads are very wide.

Measurements of fair value of financial instruments without an active market are based on a valuation technique or quoted price from a competitor. Fair value measured by a valuation technique can be extrapolated from similar financial instruments, the discounted cash flow method, or other valuation technique including a model using observable market data at the reporting date.

If the financial instruments held by the Company do not belong to active markets, the category and nature of the fair value are as follows:

• Equity investments without an active market: The fair value is assessed by market comparison approach. The main assumption is measured from the retained earnings multiplier as the basis.

• 4) Transfers between Level 1 and Level 2

There were no transfers in either direction in 2020 and 2019.

(Continued)

58

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

• 5) Reconciliation of Level 3 fair values

Reconciliation of Level 3 fair values
		Fair value through other
		comprehensive income
		(Available-for-sale financial
		assets)
		Unquoted equity instruments
Opening balance, January 1, 2020	$	1,962,947
Total gains and losses recognized:
In other comprehensive income		697,231
Cash capital increase		150,000
Capital reduction by capitak stock return		(98,000)
Ending Balance, December 31, 2020	$	2,712,178
Opening balance, January 1, 2019	$	1,764,692
Total gains and losses recognized:
In other comprehensive income		201,182
Capital reduction by capitak stock return		(2,927)
Ending Balance, December 31, 2019	$	1,962,947

For the years ended December 31, 2020 and 2019, total gains and losses that were included in “unrealized gains and losses from financial assets at fair value through other comprehensive income” were as follows:

Total gains and losses recognized: In other comprehensive income, and presented in “unrealized gains and losses from financial assets at fair value through other comprehensive income”	For the years ended December 31
	2020 2019 $ 697,231 201,182

• 6) Quantified information on significant unobservable inputs (Level 3) used in fair value measurement

The Company’ s financial instruments that use Level 3 inputs to measure fair value include “financial assets measured at fair value through profit or loss – debt investments” and “fair value through other comprehensive income (available-for-sale financial assets) – equity investments”.

The Company most fair value is categorized to Level 3 with single significant unobservable input. The equity investments without an active market has duplicate unobservable inputs. The unobservable inputs of the equity investments without an active market are independent, so there is no correlation to others.

(Continued)

59

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

Quantified information of significant unobservable inputs was as follows:

Item Financial assets at fair value through profit or loss- equity investments without an active market Financial assets at fair value through other comprehensive income-equity investments without an active market	Valuation technique Comparable transaction method Net Asset Value Method	Significant unobservable inputs Inter-relationship between significant unobservable inputs and fair value measurement ‧The multiplier of price-to-book ratio (As of December 31, 2020 and December 31, 2019, were 17.96~23.27 and 19.19~21.58) ‧Market illiquidity discount (As of December 31, 2020 and December 31, 2019, were 10%~33% and 10%~33% ) The estimated fair value would increase (decrease) if: ‧the multiplier were higher (lower) ‧the market illiquidity discount were lower (higher). ‧Net Asset Value Not applicable

• 7) Fair value measurements in Level 3 – sensitivity analysis of reasonably possible alternative assumptions

The Company’ s measurement on the fair value of financial instruments is deemed reasonable despite different valuation models or assumptions may lead to different results.

For fair value measurements in Level 3, changing one or more of the assumptions would have the following effects on profit or loss and other comprehensive income:

December 31, 2020 Financial assets at fair value through other comprehensive income Equity investments without an active market December 31, 2019 Financial assets carried at cost Equity investments without an active market	Inputs Market illiquidity discount Multiplier of price-to- earnings ratio	Fluctuation in inputs ±1% 1%	Profit	or loss Unfavour -able - -	Other comprehensive income
			Favour- able - -		Favour- able Unfavour -able 26,306 (49,694) 48,432 (170,576)

The favorable and unfavorable effects represent the changes in fair value, and fair value is based on a variety of unobservable inputs calculated using a valuation technique. The analysis above only reflects the effects of changes in a single input, and it does not include the interrelationships with another input.

(Continued)

60

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

(u) Financial risk management

• (i) Overview

The Company has exposures to the following risks from its financial instruments:

• 1) Credit risk

• 2) Liquidity risk

• 3) Market risk

The following discusses the Company’s objectives, policies and processes for measuring and managing the above mentioned risks.

• (ii) Risk management framework

The Company’ s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits.

Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

• (iii) Credit risk

Credit risk means the potential loss of the Company if the counterparty involved in that transaction defaults. The primary potential credit risk is from financial instruments like accounts receivable and equity securities.

• 1) Accounts receivables and other receivables

The Company’ s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the demographics of theCompany’s customer base, including the default risk of the industry and country in which customers operate, as these factors may have an influence on credit risk, particularly in the current deteriorating economic circumstances.

The Company establishes an impairment allowance that represents its estimate of incurred losses in respect of trade receivables. The two components of this impairment allowance are specific loss component that relates to individually significant exposure and collective loss component which the loss was incurred but not identified. The collective component is based on historical payment experience of similar financial assets.

(Continued)

61

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

2) Investment

The credit risk exposure in the bank deposits, fixed income investments and other financial instruments are measured and monitored by the Company’s finance department. As the Company deals with the banks and other external parties with good credit standing and financial institutions, corporate organization and government agencies which are graded above investment level, management believes that the Company does not have compliance issues and no significant credit risk.

3) Guarantees

As of December 31, 2020 and 2019, the endorsement guarantee provided by the Company to individual entities of joint ventures, please refer to Note 7.

(iv) Liquidity risk

Liquidity risk is a risk that the Company is unable to meet the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’ s approach to managing liquidity is to ensure, as much as possible, that it always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

(v) Market risk

Market risk is a risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company’ s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

1) Currency risk

The Company is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency. The currencies used in these transactions are denominated in USD, EUR, JPY, and RMB.

The exchange gains or losses of trade receivables in foreign currencies resulting from the changes in exchange rates are offset against the exchange losses or gains of short-term borrowings in foreign currencies; thus, the exposure to foreign currency risk is insignificant.

The interest is denominated in the same currency as borrowings. Generally, borrowings are denominated in currencies that match the cash flows generated by the underlying operations of the Company.

In respect of other monetary assets and liabilities denominated in foreign currencies, the Company ensures that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short term imbalances.

The investments of other subsidiaries of the Company are not for hedging.

(Continued)

62

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

2) Interest rate risk

The Company’ s interest rate risk arises from short-term and long-term loans bearing floating interest rates. Future cash flow will be affected by a change in market interest rate.

3) Other market risk

The Company does not enter into any commodity contracts other than to meet its expected usage and sales requirements; such contracts are not settled on a net basis.

(v) Capital management

The Company’s objectives in managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the dividend payment to the shareholders, return capital to shareholders, and issue new shares or sell assets to reduce debts.

The Company manages capital by the debt to equity ratio. Such ratio is calculated as net liabilities divided by total capital. Net liabilities represent the total amount of liabilities on the balance sheet minus cash and cash equivalents. The total amount of capital represents all the equity components (share capital, capital surplus, retained earnings, and other equity) plus net liabilities.

The Company’s debt to equity ratios at the balance sheet date were as follows:

Total liabilities Less: cash and cash equivalents Net debt Total capital Adjusted capital Debt to equity ratio	December 31, 2020 $ 24,459,660 (2,521,222) 21,938,438 51,308,711 $ 73,247,149 % 29.95	December 31, 2019 24,717,410 (1,678,358) 23,039,052 50,725,053 73,764,105 % 31.23

• (w) Investing and financing activities not affecting current cash flow

The Company’s investing and financing activities which did not affect the current cash flow in the years ended December 31, 2020 and 2019 , were as follows:

Purchases of property, plant and equipment Add: opening balances of equipment and construction payables Deduction: closing balances of equipment and construction payables	For the years ended December 31 2020 2019 $ 220,739 381,813 48,960 50,585 (71,981) (48,960) $ 197,718 383,438
	2020 $ 220,739 48,960 (71,981) $ 197,718

(Continued)

63

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

(7) Related-party transactions:

(a) Names and relationship with related parties

The following are entities that have had transactions with related parties and the Company's subsidiaries during the periods covered in the non consolidated financial statements.

Name of related party Relationship with the Company AI-Jabail Fertilizer Company Equity-method investee TR Electronic Chemical Co.,Ltd. The Company's jointly controlled entity TR Electronic Chemical (Kunshan) Ltd. The Company's jointly controlled entity’s subsidary (Note 1) TAIFER (CAMBODIA) Co., Ltd. The Company's subsidary Taifer Chemicals International Inc. 〃 Taiwan Yes Deep Ocean Water Co., Ltd. 〃 Hasbo Biotech Co., Ltd. 〃 (Note 2) PEIFENG Technology & Fertilizer Co., Ltd. The Company's subsidary TAIFER (CAYMAN) INTERNATIONAL GROUP Co., Ltd. 〃 TAIFER INTERNATIONAL (SAMOA) Co., Ltd. 〃 (Note 3) TAIFER INTERNATIONAL (SAMOA) GROUP Co., Ltd. 〃 TAIFER CHEMICAL INTERNATIONAL Co., Ltd. 〃 Council of Agriculture, Executive Court, R.O.C. Individuals are those entities in which the Company has significant influence TAIWAN FERTILIZER Legal Foundation Other related parties

TAIWAN FERTILIZER Legal Foundation

• Note 1: The bankruptcy of TR Electronic Chemical (Kunshan) Ltd. was declared by the court in China in September, 2017, and the relevant statutory procedures had been completed in August, 2020.

• Note 2: The liquidation procedure was conducted in October 2017, and the relevant statutory procedures have been completed in Apiral 2020.

• Note 3: The liquidation procedure was conducted in March 2019, and the relevant statutory procedures have been completed.

(Continued)

64

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

(b) Significant transactions with related parties

(i) Sale of Goods to Related Parties

The amounts of significant sales transactions and outstanding balances between the Company and related parties were as follows:

and related parties were as follows:
Subsidiaries	For the years ended December 31
	2020 $ 4,329	2019
		8,645

Prices charged for sales transactions with associates were not significantly different from those of non related parties.

• (ii) Purchase of Goods from Related Parties

The amounts of significant purchase transactions and outstanding balances between the Company and related parties were as follows:

AI-Jabail Fertilizer Company	For the years ended December 31	For the years ended December 31
	2020 $ 266,136	2019
		1,473,258

There were no significant differences between the terms and pricing of purchase transactions with related enterprises and those carried out with other normal vendors.

• (iii) Receivables from Related Parties

The receivables from related parties were as follows:

Account	Relationship	December 31, 2020 $ 842 455 $ 1,297	December 31, 2019
Account receivable Account receivable	Subsidiaries Joint ventrue		4,030 455
			4,485

(iv) Payables from Related Parties

The payables from related parties were as follows:

Account	Relationship	December 31, 2020 $ - 101 27,001 1,776 $ 28,878	December 31, 2019
Account payable Account payable Other payable Guarantee deposit	AI-Jabail Fertilizer Company Subsidiaries Subsidiaries Subsidiaries		235,381 - 371 1,776
			237,528

(Continued)

65

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

(v) Prepayment for Related Parties

The prepayment for related parties were as follows:

Account	Relationship	December 31, 2020 $ 90,026	December 31, 2019
Account prepayment	AI Jabail Fertilizer Company		-

The pricing and terms conditions of prepayment for related parties were based on their purchases.

(vi) Rent revenue

The Company leased its office building to its parent company in 2019 and 2018. The lease contract was based on the regional rent rate. For the years ended December 31, 2020 and 2019, the Company incurred the amounts of $13,115 and $13,388 thousand, respectively, resulting from its transaction with other related parties.

(vii) Outsourcing

The Company outsourced its subsidiary, PEIFENG Technology & Fertilizer Co., Ltd., to process fertilizer at an amount of $89,003 thousand, which was recognized as operating cost.

(viii) Others

• 1) TR Electronic Chemical Co., Ltd. (TR), a jointly controlled entity of the Corporation, had obtained a financing of US$10,000 thousand from a bank, and the Corporation and Jing Chin International Limited Corporation, a shareholder of TR, guaranteed the repayment of this financing. When TR failed to make a repayment, the bank then requested the guarantors to repay the loan partially. Because the Corporation could only provide TR-in compliance with the “Regulations Governing the Granting of Loans and Endorsements and Guarantees by Public Companies” - with a limited amount of endorsement, the Corporation’ s board approved the repayment of TR’ s loan, as following.

Due Date	Date of Repayment		Amount in USD	Amount in NTD
March 27, 2014	June 27, 2014	$	4,570	144,641
April 26, 2015	April 24, 2015		3,300	102,610
March 27, 2016	March 31, 2016		2,147	70,026

Considering the weakening operating and repayment capability of TR, the Corporation recognized an impairment loss in 2015.

(Continued)

66

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

• 2) The bankruptcy of TR Electronic Chemical (Kunshan) Ltd., declared by the court in China in September 2017, was investigated, and the proposal of liquidated property distribution was announced publicly in mid August, 2018. In November 2018, the Kunshan Court of China reversed its decision and terminated the bankruptcy liquidation process of TR, with the approval of the Market Supervision Administrations of Kunshan in August 2020. Also, the investors of TR Electronic Chemical Co. Ltd., JIN QUN INTERNATIONAL CO., Ltd. and other six stockholders, institute the civil lawsuit with joint liquidation liability in Taipei District Court. The first instance was pronounced in December, 2018. However, the stockholders were not satisfied with the result and appealed for the second instance. The second instance was pronounced in January, 2019. However, the stockholders were not satisfied with the result and appealed for the third instance. In March 2020, the Taiwan High Court delivered the appeal to the Supreme Court, and the case is still in progress.

• (c) Compensation of key management personnel

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

Salaries and other short-term employee benefits Post-employment benefits ledged assets: Asset Purpose of pledge Other financial asset non-current Guarantee for provisional attachment	Salaries and other short-term employee benefits Post-employment benefits ledged assets: Asset Purpose of pledge Other financial asset non-current Guarantee for provisional attachment	For the years ended December 31	For the years ended December 31
		2020 $ 76,426 8,447 $ 84,873 December 31, 2020 $ 159,188	2019
			69,388 1,178
			70,566
			December 31, 2019 127,046
Other financial asset non-current	Guarantee for provisional attachment

(8) Pledged assets:

(9) Commitments and contingencies:

• (a) Significant commitments and contingencies

• (i) Significant commitments and contingencies were as follows:

Purchase real estate property Purchase investment property (ii) Unused standby letters of credit USD thousands	December 31, 2020 $ 114,881 $ 5,039,234 December 31, 2020 $ 5,638	December 31, 2019
		140,957
		7,175,358
		December 31, 2019
		12,502

(Continued)

67

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

(iii) The Corporation had guarantee notes payable for its debt as follow:

Guarantee notes payable	December 31, 2020 $ 7,521,500	December 31, 2019 8,363,770

(10) Losses Due to Major Disasters:None

(11) Subsequent Events:None

(12) Other:

• (a) A summary of current-period employee benefits, depreciation, and amortization, by function, is as follows:

follows:
By item		For t	he years ended December 31
		2020		2019
	Operating Cost	Operating expense	Total	Operating Cost	Operating expense	Total
Employee benefit Salary Health and labor insurance Pension Remuneration of directors Others Depreciation Amortization	$ 451,043 36,605 22,783 - 19,748 956,288 -	463,563 22,966 15,000 62,315 9,977 49,488 6,524	914,606 59,571 37,783 62,315 29,725 1,005,776 6,524	427,502 35,216 21,651 - 18,632 929,801 -	475,150 23,770 15,417 54,967 14,273 44,598 6,661	902,652 58,986 37,068 54,967 32,905 974,399 6,661

• (i) The depreciation of non-operating income and expenses of the Company in 2020 and 2019 were $18,643 and $18,759 thousand, respectively.

• (ii) The Company for the years ended December 31, 2020 and 2019 the information of the number of employees and employee benefit expense is as follows:

Number of employees Number of directors who were not employees The average employee benefit The average salaries and wages Percentage of average employee salary expense The remuneration of supervisors

The remuneration policy for directors

(Continued)

68

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

The remuneration policy for directors is clearly set in the Company’s articles of association, which stipulates that the remuneration to the chairman shall be 1.25 times the income received by the general manager. The remuneration to the remaining directors and independent directors shall not exceed the highest salary of the Company’s employees. The surplus distribution to directors shall not exceed 1.6% of the Company’ s profit for the year. However, the independent directors do not participate in the Company’s surplus distribution.

The remuneration policy for managers

The remunerations to managers are in accordance with the managerial salary standards of the Company and the Council of Agriculture, R.O.C., which are reviewed by the Remuneration Committee and approved by the board of directors.

Furthermore, the remuneration of the Company’s managers is determined by reference to the Company’s overall operating performance, future risks and development trends of the industry, as well as the individual’s performance achievement rate and contribution to the Company.

The remuneration policy for employees

The employee remuneration includes salary and employee remuneration, as well as allowance. The recipients may include employees of affiliated companies who meet certain conditions such as rank and performance. The above conditions will have to be approved by the board of directors.

In addition, the wages of the employees of the Company are paid based on the grade table set according to the complexity of their work, the degree of responsibilities, and the professional skills required.

In order to attract outstanding employees, the Company provides an attractive remuneration policy to take care of employees and encourage them to make good performance.

• (b) In order to highlight corporate social responsibility, improve farmers' well-being, and cooperate with the government's policy of “ promoting the halving of chemical pesticides in ten years and the withdrawal of highly toxic pesticides” , in December 2019, the Company will decide to donate $123,318 thousand to Agricultural Technology Research Institute.

(Continued)

69

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

(13) Other disclosures:

• (a) Information on significant transactions:

The following is the information on significant transactions required by the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Company:

(i) Loans to other parties:

Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:
						(In Thousands of New Taiwan Dollars)
Number	Name of lender	Name of borrower	Account name	Related party	Highest balance of financing to other parties during the period	Ending balance	Actual usage amount during the period	Range of interest rates during the period	Purposes of fund financing for the borrower	Transaction amount for business between two parties	Reasons for short-term financing	Allowance for bad debt	Collateral		Individual funding loan limits	Maximum limit of fund financing
													Item	Value
0	Taiwan Fertilizer Co., Ltd. (the “Company”)	Dayun Co., Ltd/City State Co., Ltd/Kuam Chu Constructio n Co., Ltd	Lone-term receivable	No	12,249	15,890	11,454	1.845%~ 2.375%	1	79,500	－	-	Commercial paper	15,890	2,565,436	10,261,742
0	Taiwan Fertilizer Co., Ltd. (the “Company”)	OO Lin	Lone-term receivable	No	13,127	17,030	12,276	1.845%~ 2.375%	1	85,300	－	-	Commercial paper	17,030	2,565,436	10,261,742
0	Taiwan Fertilizer Co., Ltd. (the “Company”)	OO Liao	Lone-term receivable	No	12,765	16,560	11,937	1.845%~ 2.375%	1	83,120	－	-	Commercial paper	16,560	2,565,436	10,261,742
0	Taiwan Fertilizer Co., Ltd. (the “Company”)	OO Yeh	Lone-term receivable	No	13,019	16,890	12,175	1.845%~ 2.375%	1	84,500	－	-	Commercial paper	16,890	2,565,436	10,261,742
0	Taiwan Fertilizer Co., Ltd. (the “Company”)	OO Lee	Lone-term receivable	No	12,380	16,060	11,577	1.845%~ 2.375%	1	80,600	－	-	Commercial paper	16,060	2,565,436	10,261,742
0	Taiwan Fertilizer Co., Ltd. (the “Company”)	Xiangzhan Investment Developme nt Co., Ltd.	Lone-term receivable	No	12,616	15,770	11,828	1.845%~ 2.375%	1	157,880	－	-	Commercial paper	15,770	2,565,436	10,261,742
0	Taiwan Fertilizer Co., Ltd. (the “Company”)	O Tan	Lone-term receivable	No	43,831	54,810	41,110	1.845%~ 2.375%	1	78,360	－	-	Commercial paper	54,810	2,565,436	10,261,742
0	Taiwan Fertilizer Co., Ltd. (the “Company”)	OO Huang	Lone-term receivable	No	8,342	15,400	6,802	1.645%~ 2.175%	1	77,000	－	-	Commercial paper	15,400	2,565,436	10,261,742
0	Taiwan Fertilizer Co., Ltd. (the “Company”)	OO Chang	Lone-term receivable	No	4,920	8,200	-	1.645%~ 2.175%	1	82,000	－	-	Commercial paper	8,200	2,565,436	10,261,742
0	Taiwan Fertilizer Co., Ltd. (the “Company”)	OO Chuang	Lone-term receivable	No	8,607	15,890	7,017	1.645%~ 2.175%	1	79,500	－	-	Commercial paper	15,890	2,565,436	10,261,742

Note 1: (1) The total amount available for lending purpose shall not exceed twenty percent (20%) of the net worth of the Company.

• (2) The accumulated capital loan and amount of the company to a single enterprise with business transactions shall be limited to 5% of net worth of the Company.

Note 2: If there is a business transaction, the contract price between the two parties shall be used as the business transaction amount. Note 3: The second order of mortgage right mentioned above is used as collateral.

Note 4: In accordance with the letter of the Financial Supervision and Administration Commission of the Republic of China on March 11, 2020, No. 1090330422, and in practice, the constuction industry generally gives customers a payment of one to five years in installments, and writes off 10 years and 20 years The goods are disclosed in the table above.

(ii) Guarantees and endorsements for other parties:

(In Thousands of New Taiwan Dollars)

No.	Name of guarantor	Counter-party of guarantee and endorsement	Counter-party of guarantee and endorsement	Limitation on amount of guarantees and endorsements for a specific enterprise	Highest balance for guarantees and endorsements during the period	Balance of guarantees and endorsements as of reporting date	Actual usage amount during the period	Property pledged for guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements	Maximum amount for guarantees and endorsements	Parent company endorsements/ guarantees to third parties on behalf of subsidiary	Subsidiary endorsements/ guarantees to third parties on behalf of parent company	Endorsements/ guarantees to third parties on behalf of companies in Mainland China
		Name	Relationship with the Company
0	Taiwan Fertilizer Co., Ltd. (the “Company”)	Taifer Chemicals Internation al Inc.	Subsidiary	48,805	13,500	13,500	13,500	-	% 0.03	25,654,356	Y	N	N

(Continued)

70

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

Note 1: (1) The company under business dealings.

• (2) A subsidiary in which the Group directly or indirectly holds more than 50% of its common shares.

• (3) The parent company which directly or indirectly holds more than 50% of the common shares of the Group.

• (4) A subsidiary in which the Group directly or indirectly holds more than 90% of its common shares.

• (5) The financial guarantee provided by the Group based on its contractor's agreement to the same trade and co proprietor.

• (6) The financial guarantee provided by the Group based on its shareholding due tojoint venture relationship.

• (7) The financial guarantee provided by the Group based on sales contract regulated by Consumer Protection Act for sales in advance .

Note 2: The total amount of the guarantee provided by the Corporation to any individual entity should not exceed 20% of the Corporation’s net worth, or 50% of the individual net worth of Taifer.

Note 3: The total amount of guarantee should not exceed 50% of the Corporation’s net worth.

(iii) Securities held as of December 31, 2020 (excluding investment in subsidiaries, associates and joint ventures):

(In Thousands of New Taiwan Dollars)

Category and name of security	Marketable Securities Type/Name and Issuer	Relationship with company	Account title	Ending balance	Ending balance	Ending balance	Ending balance	Note
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value
Taiwan Fertilizer Co., Ltd. Taiwan Fertilizer Co., Ltd. Taiwan Fertilizer Co., Ltd.	Mutual funds Mega Diamond Money Market Fund Deutsche Far Eastern DWS Taiwan Money Market Fund Jih Sun Money Market Fund Yuanta De Li Money Market Fund Prudential Financial Money Market Fund FSITC Money Market Taishin 1699 Money Market Fund Union Money Market Fund Ordinary shares Eminent Venture Capital Corporation Eminent II VC Corp Eminent III VC Corp Taiwan Stock Exchange Corporation Top Taiwan V Venture Capital Co., Ltd Visgeneer Inc. TaiAn Technologies Corporation TSCBio Ventures Capital Co. Ding-Tang Phalanx Biotech Co., Ltd. Bion tech Inc. China Petrochemical Development Corporation Bonds International Bonds: Mizuho Financial Group	－ － － － － － － － Our Company is legal representative director of the company 〞 〞 － － Our Company is legal representative director of the company 〞 〞 － － Our Company is legal representative director of the company － －	Fair value through profit or loss- current Fair value through profit or loss- current Fair value through profit or loss- current Fair value through profit or loss- current Fair value through profit or loss- current Fair value through profit or loss- current Fair value through profit or loss- current Fair value through profit or loss- current FVOCI - noncurrent FVOCI - noncurrent FVOCI - noncurrent FVOCI - noncurrent FVOCI - noncurrent FVOCI - noncurrent FVOCI - noncurrent FVOCI - noncurrent FVOCI - noncurrent FVOCI - noncurrent FVOCI - noncurrent FVOCI - current Amortized at cost financial assets - non current	11,858 12,719 12,709 9,125 9,402 10,367 13,924 12,021 2,700 12,000 30,000 15,003 1,366 3,147 1,667 3,360 1,500 404 4,167 9,662 -	150,001 150,001 190,003 150,002 150,002 160,002 190,001 160,001 15,714 85,440 228,000 2,279,977 1,871 32,856 23,834 44,486 - - - 112,566 28,507	% - % - % - % - % - % - % - % - % 10.00 % 18.50 % 16.56 % 2.00 % 9.76 % 10.31 % 16.67 % 19.75 % 6.71 % 0.49 % 15.16 % 0.29 % -	150,001 150,001 190,003 150,002 150,002 160,002 190,001 160,001 15,714 85,440 228,000 2,279,977 1,871 32,856 23,834 44,486 - - - 112,566 28,214	Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 3 Note 3 Note 3 Note 5 Note 5 Note 3 Note 3 Note 2 Note 4

Note 1: The market value was calculated on the basis of the net asset value as of the balance sheet date.

Note 2: The market value was calculated on the basis of the closing price on the Taiwan Stock Exchange as of the balance sheet date.

Note 3: The market value was calculated on the basis of the audited financial statement for the same period.

Note 4: The amortized coste was calculated on the basis of the closing price on the Taiwan Stock Exchange as of the balance sheet date.

Note 5: The market value was calculated on the basis of the estimated fair value per share of the expert evaluation report.

(Continued)

71

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

• (iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Category and name of security	Account name	Name of counter- party	Relationship with the company	Beginning Balance	Beginning Balance	Purchases	Purchases	Sales	Sales	Sales	Sales	Ending Balance	Ending Balance
					Shares	Amount	Shares	Amount	Shares	Price	Cost	Gain (loss) on disposal	Shares	Amount
Taiwan Fertilizer Co., Ltd.	Mega DiamondMo ney Market Fund Eastspring Investments Well Pool Money Market Fund Allianz Global Investors Taiwan Money Market Fund Deutsche Far Eastern DWS Taiwan Money Market Fund Jih Sun Money Market Fund Yuanta De- Li Money Market Fund Prudential Financial Money Market Fund FSITC Money Market Taiwan Money Market Fund UPAMC James Bond Money Market Fund Taishin 1699 Money Market Fund Union Money Market Fund	FVTPL - current FVTPL - current FVTPL - current FVTPL - current FVTPL - current FVTPL - current FVTPL - current FVTPL - current FVTPL - current FVTPL - current FVTPL - current FVTPL - current	- -	- -	11,914 10,985 11,925 - 12,772 9,164 9,446 838 10,415 8,941 11,411 -	150,012 150,009 150,011 - 190,015 150,011 150,011 150,009 160,011 150,009 155,013 -	47,505 10,970 35,687 25,444 50,921 36,549 37,665 1,672 41,532 8,929 53,204 32,704	600,000 150,000 450,000 300,000 760,000 600,000 600,000 300,000 640,000 150,000 725,000 435,000	47,562 21,955 47,611 12,725 50,984 36,588 37,709 2,510 41,580 17,870 50,692 20,683	600,012 300,009 600,011 150,000 760,015 600,011 600,011 450,009 640,011 300,009 690,013 275,000	600,710 300,251 600,561 150,078 760,936 600,640 600,700 450,432 640,742 300,240 690,766 275,186	698 243 550 78 920 629 688 423 731 231 754 186	11,858 - - 12,719 12,709 9,125 9,402 - 10,367 - 13,924 12,021	150,001 - - 150,001 190,003 150,002 150,002 - 160,002 - 190,001 160,001

Note: Unrealized gain and loss on financial assets were recognized.

(v) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock:None

(vi) Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Type of property	Transaction date	Acquisition date	Book value	Transaction amount	Amount actually receivable	Gain from disposal	Counter-party	Nature of relationship	Purpose of disposal	Price reference	Other terms
Taiwan Fertilizer Co., Ltd.	Investment property	March 3, 2020	June 1,1953 ~September 1, 1984	320,470	1,280,000	1,280,000	959,530 W C L D	an Cixing onstruction Co., td.、Fuhui evelopment Co., Ltd.	None	To activate unused assets	Appraisal report	None

(Continued)

72

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

• (vii) Related-party transactions for purchases and sales with amounts exceeding the lower of NT$300 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Related party	Nature of relationship	Transaction details Purchase/Sale Amount Percentage of total purchases/sales Payment terms	Transaction details Purchase/Sale Amount Percentage of total purchases/sales Payment terms	Transaction details Purchase/Sale Amount Percentage of total purchases/sales Payment terms	Transaction details Purchase/Sale Amount Percentage of total purchases/sales Payment terms	Transactions with terms different from others	Transactions with terms different from others	Notes/Accounts receivable (payable)	Notes/Accounts receivable (payable)	Note
				Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
Taiwan Fertilizer Co., Ltd.	AI-Jabail Fertilizer Company i	Equity-method nvestee	Purchase	266,136	5.03%	Same as those for third parties	Determined under the considerations of international market price and production cost	30 days	-	-%	-

(viii) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Counter-party	Nature of relationship	Ending balance	Turnover rate	Overdue	Overdue	Amounts received in subsequent period	Allowance for bad debts
					Amount	Action taken
Taiwan Fertilizer Co., Ltd.	TR ELECTRONIC CHEMICAL CO.,LTD.	Jointly controlled entity	Other receivable 317,277	-	317,277	-	-	317,277

(ix) Trading in derivative instruments:None

(b) Information on investees:

The following is the information on investees for the years ended December 31, 2020 (excluding information on investees in Mainland China):

(In Thousands of New Taiwan Dollars)

Name of investor	Name of investee	Location	Main businesses and products	Original investment amount	Original investment amount	Balance as of December 31, 2020	Balance as of December 31, 2020	Balance as of December 31, 2020	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2020	December 31, 2019	Shares (thousands)	Percentage of wnership	Carrying value
Taiwan Fertilizer Co., Ltd. 〃 〃 〃 〃 〃 〃 〃	Al-Jubail Fertilizer Company Taifer Chemicals International Inc Taiwan Yes Deep Ocean Water Co., Ltd. PEIFENG TECHNOLOGY & FERTILIZER CO., LTD. MITAGRI CO., LTD. Taiwan Agricultural Investment and Development co., Ltd. TAIFER (CAYMAN) INTERNATIONAL GROUP CO., LTD. TAIFER (CAMBODIA) CO., LTD	Kingdom of Saudi Arabia Taiwan I f f r Taiwan i Taiwan f Taiwan Taiwan Cayman Islands I Cambodia I f	Manufacture of urea, 2-EH (2-ethyl hexanol), and DOP (dioctyl phthalate) nternational trade; wholesale of ertilizer, tobacco, liquor, beverage, orage, machinery, electrical equipment, etc.; development, operation and management of esidential buildings and factory buildings; special zone development; investment in and construction of public works; development of new towns and districts; agent services on regional district requisition; land adjustment; and real estate rental or leasing Wholesale of drinks, food and grocery and other articles for daily use; tobacco and liquor; glass and pottery; hygiene products; fertilizers and other chemical products; and cosmetics; and nternational trade Manufacture and wholesale of ertilizer Wholesale and retail of products for organic agriculture Wholesale and retail of products for organic agriculture nvestment and holding agriculture nternational trade; wholesale of ertilizer	3,050,000 126,300 1,224,235 2,400,000 80,000 60,000 321,900 40,052	3,050,000 126,300 1,224,235 1,900,000 80,000 60,000 321,900 40,052	7 5,500 25,763 240,000 8,000 6,000 11 -	% 50.00 % 100.00 % 100.00 % 100.00 % 33.33 % 31.58 % 100.00 % 100.00	9,202,183 92,301 287,691 2,427,460 32,881 47,028 - 32,133	1,565,731 8,769 (3,606) 38,589 (21,042) (23,365) - 1,224	593,696 8,769 (2,798) 38,589 (7,330) (8,162) - 1,214	Associate Subsidiary Subsidiary Subsidiary Associate Associate Subsidiary Subsidiary

(Continued)

73

TAIWAN FERTILIZER CO., LTD. Notes to Financial Statements

Name of investor	Name of investee	Location	Main businesses and products	Original investment amount	Original investment amount	Balance as of December 31, 2020	Balance as of December 31, 2020	Balance as of December 31, 2020	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2020	December 31, 2019	Shares (thousands)	Percentage of wnership	Carrying value
TAIFER (CAYMAN) INTERNATIONAL GROUP CO., LTD. Taifer Chemicals International Inc. TAIFER INTERNATIONAL (SAMOA) GROUP CO., LTD.	TAIFER INTERNATIONAL (SAMOA) GROUP CO.,LTD. TAIFER INTERNATIONAL (SAMOA) GROUP CO.,LTD. TAIFER CHEMICAL INTERNATIONAL CO.,LTD.	Cayman Islands Samoa Mongolia	Investment and holding Investment and holding Real estate lease	321,962 42,618 41,077	321,962 42,618 41,077	- - -	% 51.00 % 100.00 % 100.00	- 62,257 62,001	- 6,398 6,398	No applicable - -	Jointly controlled entity Subsidiary Subsidiary

• (c) Information on investment in mainland China:

(i) The names of investees in Mainland China, the main businesses and products, and other information:

(In Thousands of New Taiwan Dollars)

Name of investee	Main businesses and products	Total amount of paid-in capital	Method of investment	Accumulated outflow of investment from Taiwan as of January 1, 2019	Accumulated outflow of investment from Taiwan as of January 1, 2019	Investment flows	Investment flows	Accumulated outflow of investment from Taiwan as of December 31, 2020	Net income (losses) of the investee	Net income (losses) of the investee	Percentage of ownership	Investment income (losses)	Book value	Accumulated remittance of earnings in currentperiod
						Outflow	Inflow
TR Electronic Chemical (Kunshan) Ltd.	Manufacture of nitric acid, hydrofluoric acid, ammonia, phosphoric acid, oxalic acid, ammonia fluoride and LCD and IC Stripper	USD$ 21,500 (NT$612,922) (note4)	(note 3)	USD$ 10,965 (NT$312,590) (note4)		-	-	USD$ - (NT$-) (note 1)	USD$ - (NT$ - ) (note 1)		-%	USD$ - (NT$ - ) (note 5)	USD$ - (NT$ - ) (note 5)	-
Limitation on investment in Mainland China:
Accumulated Investment in Mainland China as of December 31, 2020					Investment Amounts Authorized by Investment Commission, MOEA					Upper Limit on Investment
NT$ - (US$ - ) (note1)					NT$ 312,590 (US$ 10,965 ) (note 4)					NT$30,785,227 (note 2)

(ii) Limitation on investment in Mainland China:

Note 1: The Company applied for the cessation of it operations to the local court on March 17, 2017, and the cessation was completed in August 2020. The accumulated investment amount of disposed in the current period is NT$312,590 thousand (US$10,965 thousand), and the accumulated investment amount from Taiwan of remitted at the end of the period is zero.

Note 2: The limit is based on the “Regulations Governing the Approval of Investment or Technical Cooperation in Mainland China” issued by the Investment Commission under the Ministry of Economic Affairs; the amount is 60% of shareholders’ equity or of consolidated shareholders’ equity.

Note 3: Indirect investment in mainland China through a subsidiary in a third place. (Investor: TAIFER (CAYMAN) INTERNATIONAL GROUP CO., LTD.)

Note 4: The foreign currency amounts of original investment amount and carrying value were translated into New Taiwan dollars at the exchange rate NT$28.508 as of December 31, 2020.

Note 5: As of June 30, 2015, the investment accounted for using the equity method balance of the Corporation was zero, so the Corporation didn’t recognize income (loss) of the investment.

(iii) Significant transactions:None

(d) Major shareholders:

Shareholding Shareholder’s Name	Shares	Percentage
Council of Agriculture, Executive Court, R.O.C.	235,886,376	% 24.07

(14) Segment information:

Please refer to the consolidated financial report for the year ended December 31, 2020.

74

TAIWAN FERTILIZER CO., LTD.

Statement of cash and cash equivalents

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Please refers to note 6(a).

Statement of trade receivables

Vendor name Non-related parties HSIN TAI CHEMICAL CO., LTD Other(Note)	Description Account $ 96,281 550,527 $ 646,808

Note：The year-end balance of each vendor doesn't exceed 5% of the account balance.

75

TAIWAN FERTILIZER CO., LTD.

Statement of other financial assets

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Item Time deposits Time deposits	Description Time deposits with original maturities more than 3 months Time deposits with original maturities more than 1 year	Account Note $ 900,000 Current $ 159,188 Non-current

76

TAIWAN FERTILIZER CO., LTD.

Statement of changes in investments accounted for using the equity method

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Beginning Balance Addition Name of investee Shares (in thousand) Amount Shares (in thousand) Amount AI-Jabail Fertilizer Company 7 $ 9,304,896 - - TAIFER (CAYMAN) INTERNATIONAL GROUP CO., LTD. 11 - - - Taifer Chemicals International Inc. 5,500 89,469 - - MITAGRI CO., LTD. 8,000 40,211 - - Taiwan Agricultural Investment and Development Co., Ltd. 6,000 55,190 - - Taiwan Yes Deep Ocean Water Co., Ltd. 25,763 290,489 - - TAIFER (CAMBODIA) CO., LTD. - 32,698 - - PEIFENG Technology & Fertilizer Co., Ltd. 190,000 1,888,871 50,000 500,000 $ 11,701,824 500,000 Note 1: Adjustment of measured by using the equity method: Share of profit or loss of subsidiaries, associates and joint ventures accounted for using equity method. Cash dividends paid by investee(not deduct tax prepayment for shareholders) Exchange differences on translation of foreign financial statements Changes in other equity	Decrease	Decrease	Amount - - - - - - - -	Tax prepayment for shareholders		Adjustment of measured by using the equity method (Note 1)	Ending Balance	Ending Balance	Amount 9,202,183 - 92,301 32,881 47,028 287,691 32,133 2,427,460 12,121,677	Market Net Asse	Value or ts Value Total amount Collateral 9,405,861 None - 〃 97,609 〃 32,881 〃 47,028 〃 199,796 〃 32,133 〃 2,427,460 〃
	Shares (in thousand) - - - - - - - - $ $						Shares (in thousand) 7 11 5,500 8,000 6,000 25,763 - 240,000	Percentage of ownership % 50.00 % 100.00 % 100.00 % 33.33 % 31.58 % 100.00 % 100.00 % 100.00		Unit price - - - - - - - -
	- - - - - - - -					(111,565) - 2,832 (7,330) (8,162) (2,798) (565) 38,589 (88,999)
			-
		$ $

77

TAIWAN FERTILIZER CO., LTD.

Statement of changes in property, plant and equipment

For the year ended December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Please refers to note 6(i).

Statement of changes in accumulated depreciation of property, plant and equipment

Please refers to note 6(i).

Statement of changes in investment property

Please refers to note 6(k).

78

TAIWAN FERTILIZER CO., LTD.

Statement of changes in accumulated depreciation of

investment property

For the year ended December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Please refers to note 6(k).

Statement of operating revenue

Item Fertilizer Chemical products Urea Electronic chemicals products Other Sales Revenue Less：sales return, sales discounts and allowances Net sales revenue Rental income Other	Description Account $ 4,976,521 2,667,611 264,938 319,404 8,876 8,237,350 (18,825) 8,218,525 1,586,529 126,075 $ 9,931,129

79

TAIWAN FERTILIZER CO., LTD.

Statement of operating costs

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Item Raw material Raw material, January 1 Add：Purchases Less：Raw material, December 31 Non-operating expense Direct raw material Direct labor Manufacturing overhead Cost of manufacturing Add:Work in process, January 1 Purchases Less:Work in process, December 31 Transferred(includes amount Transferred to selling expense and loss) Cost of finished goods Add: Finished goods, January 1 Purchases Less:Finished goods, December 31 Cost of goods sold Lease cost Other operating cost	Description	Account Note $ 1,350,956 4,925,773 (1,761,455) (4,424) 4,510,850 221,165 1,545,998 6,278,013 440,546 93,649 (410,680) (38,758) 6,362,770 325 268,561 (182) 6,631,474 730,230 96,785 $ 7,458,489

80

TAIWAN FERTILIZER CO., LTD.

Statement of selling expenses

For the year ended December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Item Salary and wages expense Rent expense Supplies expense Travelling expense Shipping expenses Postage expenses Repair and maintenance expense Advertisement expense Utilities expense Insurance expense Entertainment expense Donation expense Tax Depreciation expense Various amortization Employee benefit Commission expense Training expense Professional service Expense Transportation expense Export expense Sample fee Pension Computer usage expense Other Total	Sales $ 45,995 199 293 1,510 84,776 761 176 65,846 230 3,574 5,274 - 907 1,305 - 1,661 7,441 1 148 2,562 10,991 770 1,494 - 22,147 $ 258,061	Administration 454,939 1,032 2,101 1,062 - 3,406 19,027 1,742 6,171 21,789 6,467 4,387 253,220 40,406 6,411 16,294 - 1,496 45,149 890 - 326 12,700 13,002 47,658 959,675		Research and development 24,944 54 63 441 - 141 1,844 - 4,119 1,863 180 3 194 7,777 113 5,408 - 2 987 155 - - 806 93 17,415 66,602	Total
					525,878 1,285 2,457 3,013 84,776 4,308 21,047 67,588 10,520 27,226 11,921 4,390 254,321 49,488 6,524 23,363 7,441 1,499 46,284 3,607 10,991 1,096 15,000 13,095 87,220
					1,284,338