TRI — Interim / Quarterly Report 2020

Dec 1, 2020

TEST RESEARCH, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND REVIEW REPORT OF INDEPENDENT

ACCOUNTANTS MARCH 31, 2020 AND 2019

-----------------------------------------------------------------------------------------------------------------------------------For the convenience of readers and for information purpose only, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

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REVIEW REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

PWCR 20000207

To the Board of Directors and Stockholders of Test Research, Inc.

Introduction

We have reviewed the accompanying consolidated balance sheets of Test Research, Inc. and subsidiaries (the “Group”) as at March 31, 2020 and 2019, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the three months then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and International Accounting Standard 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission. Our responsibility is to express a conclusion on these consolidated financial statements based on our reviews.

Scope of Review

Except as explained in the following paragraph, we conducted our reviews in accordance with the Statement of Auditing Standards No. 65 “Review of Financial Information Performed by the Independent Auditor of the Entity” in the Republic of China. A review of consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Basis for Qualified Conclusion

As explained in Note 4(3), the financial statements of insignificant consolidated subsidiaries were not reviewed by independent accountants. Those statements reflect total assets of NT$1,289,841 thousand and NT$1,467,926 thousand, constituting 18% and 22% of the consolidated total assets, and total liabilities of NT$124,716 thousand and NT$62,414 thousand, constituting 9% and 5% of the consolidated total liabilities as at March 31, 2020 and 2019, respectively, and total comprehensive (loss) income of (NT$3,736) thousand and NT$15,245 thousand, constituting (1%) and 6% of the consolidated total comprehensive income for the three months then ended, respectively.

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Qualified Conclusion

Except for the adjustments to the consolidated financial statements, if any, as might have been determined to be necessary had the financial statements of certain consolidated subsidiaries been reviewed by independent accountants, that we might have become aware of had it not been for the situation described above, based on our reviews, nothing has come to our attention that causes us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of the Group as at March 31, 2020 and 2019, and of its consolidated financial performance and its consolidated cash flows for the three months then ended in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and International Accounting Standard 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission.

Pan, Hui-Lin Liao, A-Shen

For and on behalf of PricewaterhouseCoopers, Taiwan May 6, 2020

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The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

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TEST RESEARCH, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

MARCH 31, 2020, DECEMBER 31, 2019 AND MARCH 31, 2019

(Expressed in thousands of New Taiwan dollars) (The balance sheets as of March 31, 2020 and 2019 are reviewed, not audited)

Assets	Notes	March 31, 2020 AMOUNT % $ 1,412,870 20 225,547 3 21,181 - 2,141,491 30 27,814 1 892,826 13 41,320 1 4,763,049 68 2,126,229 30 60,516 1 20,321 - 71,533 1 9,794 - 2,288,393 32 $ 7,051,442 100	December 31, 2019 AMOUNT % $ 1,300,530 20 204,777 3 25,343 - 1,934,508 30 21,016 - 738,433 11 39,434 1 4,264,041 65 2,135,082 33 61,824 1 20,237 - 76,260 1 11,591 - 2,304,994 35 $ 6,569,035 100	March 31, 2019	March 31, 2019
		AMOUNT $ 1,412,870 225,547 21,181 2,141,491 27,814 892,826 41,320 4,763,049 2,126,229 60,516 20,321 71,533 9,794 2,288,393 $ 7,051,442	AMOUNT $ 1,300,530 204,777 25,343 1,934,508 21,016 738,433 39,434 4,264,041 2,135,082 61,824 20,237 76,260 11,591 2,304,994 $ 6,569,035	AMOUNT $ 1,395,704 125,970 35,504 1,924,199 22,532 928,952 48,996 4,481,857 2,164,308 7,226 15,581 63,719 8,420 2,259,254 $ 6,741,111	%
Current assets 1100 Cash and cash equivalents 1136 Current financial assets at amortised cost 1150 Notes receivable, net 1170 Accounts receivable, net 1200 Other receivables 130X Inventory 1470 Other current assets 11XX Total current assets Non-current assets 1600 Property, plant and equipment 1755 Right-of-use assets 1780 Intangible assets 1840 Deferred income tax assets 1900 Other non-current assets 15XX Total non-current assets 1XXX Total assets	6(1) 6(2) 6(3) 6(3) 6(4) 8 6(5) and 8 6(6)				21 2 - 28 - 14 1
					66
					32 - 1 1 -
					34
					100

(Continued)

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TEST RESEARCH, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS MARCH 31, 2020, DECEMBER 31, 2019 AND MARCH 31, 2019

(Expressed in thousands of New Taiwan dollars) (The balance sheets as of March 31, 2020 and 2019 are reviewed, not audited)

					March 31, 2020				December 31, 2019	December 31, 2019			March 31, 2019
	Liabilities andEquity	Notes			AMOUNT	%			AMOUNT	%			AMOUNT	%
	Current liabilities
2130	Contract liabilities - current	6(12)		$	21,942		-	$	48,694		1	$	22,135	-
2150	Notes payable				30,520		1		26,398		-		20,916	-
2170	Accounts payable				719,187	10			455,746		7		450,414	7
2200	Other payables	6(7)			203,956		3		276,615		4		226,361	4
2230	Current income tax liabilities				166,723		3		109,836		2		220,838	3
2280	Current lease liabilities				22,446		-		20,582		-		7,064	-
2300	Other current liabilities				6,233		-		8,943		-		8,302	-
21XX	Total current liabilities				1,171,007	17			946,814	14			956,030	14
	Non-current liabilities
2550	Provisions for liabilities - non-
	current				38,159		1		35,298		-		32,552	1
2570	Deferred income tax liabilities				99,221		1		102,193		2		93,741	1
2580	Non-current lease liabilities				37,285		-		40,940		1		-	-
2600	Other non-current liabilities	6(8)			60,900		1		61,358		1		57,415	1
25XX	Total non-current liabilities				235,565		3		239,789		4		183,708	3
2XXX	Total liabilities				1,406,572	20			1,186,603	18			1,139,738	17
	Equity attributable to owners of
	the parent
	Share capital	6(9)
3110	Common stock				2,362,160	33			2,362,160	36			2,362,160	35
	Capital surplus	6(10)
3200	Capital surplus				53,290		1		53,290		1		53,290	1
	Retained earnings	6(11)
3310	Legal reserve				1,213,046	17			1,213,046	18			1,106,607	16
3320	Special reserve				41,795		1		41,795		1		30,123	-
3350	Unappropriated retained earnings				2,049,562	29			1,779,411	27			2,076,482	31
	Other equity interest
3400	Other equity interest		(		74,983) (		1) (		67,270) (		1) (		27,289)	-
31XX	Equity attributable to owners
	of the parent				5,644,870	80			5,382,432	82			5,601,373	83
3XXX	Total equity				5,644,870	80			5,382,432	82			5,601,373	83
3X2X	Total liabilities and equity			$	7,051,442	100		$	6,569,035	100		$	6,741,111	100

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

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TEST RESEARCH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars, except for earnings per share amount) (UNAUDITED)

Items

Three months ended March 31 2020 2019 Notes AMOUNT % AMOUNT % 6(12) $ 1,162,501 100 $ 976,359 100 6(4)(15)(16) ( 516,639 ) ( 44) ( 414,421) ( 42 ) 645,862 56 561,938 58 6(15)(16) ( 169,868 ) ( 14) ( 181,054) ( 19 ) ( 43,482 ) ( 4) ( 38,458) ( 4 ) ( 112,476 ) ( 10) ( 80,178) ( 8 ) 12(2) ( 1,416 ) - 14,329 1 ( 327,242 ) ( 28) ( 285,361) ( 30 ) 318,620 28 276,577 28 6(13) 8,055 1 12,847 2 6(14) 7,188 - 12,012 1 6(6) ( 338 ) - ( 155) - 14,905 1 24,704 3 333,525 29 301,281 31 6(17) ( 63,374 ) ( 6) ( 62,883) ( 7 ) $ 270,151 23 $ 238,398 24 ( $ 9,641 ) - $ 18,133 2 6(17) 1,928 - ( 3,627) - ($ 7,713 ) - $ 14,506 2 $ 262,438 23 $ 252,904 26 $ 270,151 23 $ 238,398 24 $ 262,438 23 $ 252,904 26 6(18) $ 1.14 $ 1.01 $ 1.14 $ 1.01

4000 Operating revenue 5000 Operating costs 5950 Net operating margin Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6300 Research and development expenses 6450 Expected credit impairment (loss) gain 6000 Total operating expenses 6900 Operating profit Non-operating income and expenses 7010 Other income 7020 Other gains and losses 7050 Finance costs 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Income tax expense 8200 Profit for the period Other comprehensive income Components of other comprehensive income that will be reclassified to profit or loss 8361 Financial statements translation differences of foreign operations 8399 Income tax relating to the components of other comprehensive income 8300 Total other comprehensive (loss) income for the period 8500 Total comprehensive income for the period Profit attributable to: 8610 Owners of the parent Comprehensive income attributable to: 8710 Owners of the parent Earnings per share (in dollars) 9750 Basic earnings per share 9850 Diluted earnings per share

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

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TEST RESEARCH, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars) (UNAUDITED)

2019 Balance at January 1, 2019 Profit for the period Other comprehensive income for the period Total comprehensive income Balance at March 31, 2019 2020 Balance at January 1, 2020 Profit for the period Other comprehensive loss for the period Total comprehensive income (loss) Balance at March 31, 2020	Notes			Equity attributable to owners	Equity attributable to owners	Equity attributable to owners	Equity attributable to owners	Equity attributable to owners	Equity attributable to owners	of the parent	of the parent	of the parent	of the parent	Totalequity
			Share capital - commonstock	Capital Reserves						Retained Earnings
				Total capital surplus, additional paid- incapital			Donated assets received		Legal reserve		Special reserve
			$ 2,362,160 - - - $ 2,362,160 $ 2,362,160 - - - $ 2,362,160		$ 51,874 - - - $ 51,874 $ 51,874 - - - $ 51,874		$ 1,416 - - - $ 1,416 $ 1,416 - - - $ 1,416		$ 1,106,607 - - - $ 1,106,607 $ 1,213,046 - - - $ 1,213,046		$ 30,123 - - - $ 30,123 $ 41,795 - - - $ 41,795		$ 1,838,084 ($ 41,795) $ 5,348,469 238,398 - 238,398 - 14,506 14,506 238,398 14,506 252,904 $ 2,076,482 ($ 27,289) $ 5,601,373 $ 1,779,411 ($ 67,270) $ 5,382,432 270,151 - 270,151 - ( 7,713) ( 7,713 ) 270,151 ( 7,713) 262,438 $ 2,049,562 ($ 74,983) $ 5,644,870

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

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TEST RESEARCH, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

(UNAUDITED)

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments Adjustments to reconcile profit (loss) Depreciation Amortisation Expected credit impairment loss (gain) Interest income Interest expense Loss on disposal of property, plant and equipment Changes in operating assets and liabilities Changes in operating assets Notes receivable, net Accounts receivable Other receivables Inventory Other current assets Changes in operating liabilities Contract liabilities - current Notes payable Accounts payable Other payables Other current liabilities Provisions for liabilities - non-current Other non-current liabilities Cash inflow generated from operations Interest received Interest paid Income taxes paid Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Financial assets at amortised cost Decrease (increase) in other financial assets Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets Decrease in refundable deposits Decrease in other non-current assets Net cash flows used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Lease principal repayment Net cash flows used in financing activities Effect due to changes in exchange rate Net increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period

Three months ended March 31 Notes 2020 2019 $ 333,525 $ 301,281 6(15) 26,410 27,899 6(15) 2,960 2,384 12(2) 1,416 ( 14,329 ) 6(13) ( 2,100 ) ( 1,787 ) 338 155 6(14) 200 697 4,162 23,565 ( 208,399 ) 157,618 ( 7,260 ) 4,376 ( 147,088 ) ( 30,600 ) ( 5,990 ) ( 2,822 ) ( 26,752 ) ( 17,499 ) 4,122 ( 5,982 ) 263,441 69,282 ( 72,659 ) ( 81,977 ) ( 2,710 ) 109 2,861 5,580 ( 458 ) ( 437 ) 166,019 437,513 2,562 2,059 ( 338 ) ( 155 ) ( 2,804 ) ( 13,607 ) 165,439 425,810 ( 20,770 ) ( 125,970 ) 2,998 ( 10 ) 6(5) ( 6,767 ) ( 10,570 ) 116 2,395 ( 3,047 ) ( 1,244 ) 1,797 396 - 7 ( 25,673 ) ( 134,996 ) ( 7,050 ) ( 5,640 ) ( 7,050 ) ( 5,640 ) ( 20,376 ) 13,097 112,340 298,271 1,300,530 1,097,433 $ 1,412,870 $ 1,395,704

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

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TEST RESEARCH, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT AS OTHERWISE INDICATED) (UNAUDITED)

1. HISTORY AND ORGANISATION

Test Research, Inc. (the Company) was incorporated in April 1989 under the provisions of the Company Law of the Republic of China (R.O.C.). The Company and its subsidiaries (collectively referred herein as the “Group”) are primarily engaged in the design, assembly, manufacture, sales, repairs and maintenance of automated inspection and testing equipment.

2. THE DATE OF AUTHORISATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORISATION

These consolidated financial statements were reported to the Board of Directors on May 6, 2020.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

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

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

New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IAS 1 and IAS 8, ‘Disclosure Initiative-Definition of Material’ Amendments to IFRS 3, ‘Definition of a business’ Amendments to IFRS 9, IAS 39 and IFRS7, ‘Interest rate benchmark reform’	January 1, 2020 January 1, 2020 January 1, 2020

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

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

the Group

None.

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

New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs as

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endorsed by the FSC are as follows:

Effective date by International Accounting New Standards, Interpretations and Amendments Standards Board Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets To be determined by between an investor and its associate or joint venture’ International Accounting Standards Board IFRS 17, ‘Insurance contracts’ January 1, 2021 Amendments to IAS 1, ‘Classification of liabilities as current or nonJanuary 1, 2022 current’

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted are consistent with Note 4 in the consolidated financial statements for the year ended December 31, 2019, except for the compliance statement, basis of preparation, basis of consolidation and additional policies as set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

• A. The consolidated financial statements of the Group have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Accounting Standard 34, ‘Interim financial reporting’ as endorsed by the FSC.

• B. These consolidated financial statements are to be read in conjunction with the consolidated financial statements for the year ended December 31, 2019.

(2) Basis of preparation

• A. Except for defined benefit liabilities recognised based on the net amount of pension fund assets less present value of defined benefit obligation, the consolidated financial statements have been prepared under the historical cost convention.

• B. The preparation of financial statements in conformity with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

(3) Basis of consolidation

• A. Basis for preparation of consolidated financial statements:

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The basis for preparation of consolidated financial statements is consistent with the basis used in the 2019 consolidated financial statements.

B. Subsidiaries included in the consolidated financial statements:

Name of investor	Main business Name of subsidiary activities DOLI TRADING LIMITED (DOLI) Trading TEST RESEARCH USA INC. (TRU) Trading TRI TEST RESEARCH EUROPE GMBH (TRE) Trading TRI JAPAN CORPORATION (TRJ) Trading TRI MALAYSIA SND. BHD (TRM) Trading TRI KOREA CO., LTD. (TRK) Trading TRI INVESTMENTS LIMITED (TIL) Investment holdings TRI Electronic (Shenzhen) Limited (TRI (SHENZHEN)) Manufacture and sales of test equipment Manufacture and sales of test equipment TRI Electronic (Shanghai) Limited (TRI (SHANGHAI)) Import and export of equipment, consulting and after- sale maintenance service of equipment TRI Electronic (Suzhou) Limited (TRI (SUZHOU))	% of Ownership	% of Ownership	Description
		March 31, 2020	December 31, 2019
Test Research, Inc. Test Research, Inc. Test Research, Inc. Test Research, Inc. Test Research, Inc. Test Research, Inc. Test Research, Inc. TRI INVESTMENTS LIMITED (TIL) TRI INVESTMENTS LIMITED (TIL) TRI INVESTMENTS LIMITED (TIL)		100 100 100 100 100 100 100 100 100 100	100 100 100 100 100 - 100 100 100 100	- - - - - Note 1 - - - -

Note 1: TRI KOREA CO., LTD. (TRK) was established on January 17, 2020.

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% of Ownership

	% of Ownership
Test Research, Inc. DOLI TRADING LIMITED (DOLI) Trading Test Research, Inc. TEST RESEARCH USA INC. (TRU) Trading Test Research, Inc. TRI TEST RESEARCH EUROPE GMBH (TRE) Trading Test Research, Inc. TRI JAPAN CORPORATION (TRJ) Trading Test Research, Inc. TRI MALAYSIA SND. BHD (TRM) Trading Test Research, Inc. TRI INVESTMENTS LIMITED (TIL) Investment holdings TRI INVESTMENTS LIMITED (TIL) TRI Electronic (Shenzhen) Limited (TRI (SHENZHEN)) Manufacture and sales of test equipment Manufacture and sales of test equipment TRI INVESTMENTS LIMITED (TIL) TRI Electronic (Shanghai) Limited (TRI (SHANGHAI)) Import and export of equipment, consulting and after-sale maintenance service of equipment Name of investor Name of subsidiary Main business activities TRI INVESTMENTS LIMITED (TIL) TRI Electronic (Suzhou) Limited (TRI (SUZHOU))	March 31, 2019 Description
	100 - 100 - 100 - 100 - 100 - 100 - 100 - 100 - - 100

Except for the financial statements of DOLI as of and for the three months ended March 31, 2019 which were reviewed by the Company’s independent accountants, the financial statements of the abovementioned subsidiaries included in the Group's consolidated financial statements for the three months ended March 31, 2020 and 2019 were not reviewed by independent accountants as these subsidiaries did not meet the definition of a significant subsidiary.

• C. Subsidiaries not included in the consolidated financial statements: None.

• D. Adjustments for subsidiaries with different balance sheet dates: None.

• E. Significant restrictions: None.

• F. Subsidiaries that have non-controlling interests that are material to the Group: None.

－ (4) Leasing arrangements (lessor) lease receivables/ operating leases

Lease income from an operating lease (net of any incentives given to the lessee) is recognised in profit or loss on a straight-line basis over the lease term.

(5) Income tax

• A. The interim period income tax expense is recognised based on the estimated average annual effective income tax rate expected for the full financial year applied to the pretax income of the

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interim period, and the related information is disclosed accordingly.

• B. If a change in tax rate is enacted or substantively enacted in an interim period, the Group recognises the effect of the change immediately in the interim period in which the change occurs. The effect of the change on items recognised outside profit or loss is recognised in other comprehensive income or equity while the effect of the change on items recognised in profit or loss is recognised in profit or loss.

(6) Employee benefits

• A. Short-term employee benefits

Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period and should be recognised as expense in that period when the employees render service.

B. Pensions

• (a) Defined contribution plans

For defined contribution plans, the contributions are recognised as pension expense when they are due on an accrual basis. Prepaid contributions are recognised as an asset to the extent of a cash refund or a reduction in the future payments.

• (b) Defined benefit plans

Pension cost for the interim period is calculated on a year-to-date basis by using the pension cost rate derived from the actuarial valuation at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events. And, the related information is disclosed accordingly.

• C. Employees’ compensation and directors’ remuneration

Employees’ compensation and directors’ and supervisors’ remuneration are recognised as expense and liability, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates.

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

The preparation of these consolidated financial statements requires management to make critical judgments in applying the Group’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. In the process of applying the Group's accounting policies, there is no critical accounting judgment. The critical accounting estimates and assumptions is addressed below:

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Evaluation of inventories

The Group’s inventories are stated at the lower of cost and net realisable value. The Group must determine the net realisable value of inventories on balance sheet date using judgements and estimates. Management considers the rapidly changing technology and the short life cycle of electronic products in evaluating inventories. For inventories that are over a certain age and individually identified obsolete or slow-moving items, the net realisable value is determined based on inventory aging and the market demand of such items in the future for a specific period, which are based on sales, obsolescence and the inventory quality. Such an evaluation of inventories is principally based on the demand for the products within the specified period in the future. As evaluation of inventories usually involves subjective judgment and a high degree of estimation uncertainty, there may be material changes to the evaluation.

As of March 31, 2020, the carrying amount of inventories was $892,826.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash on hand and revolving funds Checking accounts and demand deposits Time deposits Short-term notes and bills	March 31, 2020 1,448 $ 1,171,422 - 240,000 1,412,870 $	December 31, 2019 1,202 $ 996,972 122,356 180,000 1,300,530 $	March 31,2019
			1,262 $ 761,961 152,481 480,000
			1,395,704 $

• A. The Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.

• B. The Group’s restricted cash and cash equivalents were classified as other financial assets (shown as “other current assets”). Please refer to Note 8 for details.

(2) Financial assets at amortised cost

Current items: Time deposits maturing over three months	March 31,2020 225,547 $	December 31,2019 204,777 $	March 31,2019
			125,970 $

Information relating to credit risk of financial assets at amortised cost is provided in Note 12(2).

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(3) Notes and accounts receivable

		March 31,2020	December	31,2019		March 31,2019
Notes receivable	$	21,181	$	25,343	$	35,504
Accounts receivable	$	2,150,088	$	1,941,765	$	1,937,974
Less: Allowance for
uncollectible
accounts	(	8,597)	(	7,257)	(	13,775)
	$	2,141,491	$	1,934,508	$	1,924,199

• A. The ageing analysis of accounts receivable and notes receivable that were past due but not impaired is as follows:

Not past due Past due Up to 60 days 61 to 90 days 91 to 180 days 181 to 365 days Over 365 days	Accounts Notes receivable receivable 1,867,773 $ 21,181 $ 136,269 - 94,323 - 24,774 - 17,155 - 9,794 - 2,150,088 $ 21,181 $ March 31,2020	December	Notes receivable 25,343 $ - - - - - 25,343 $ 31,2019	March 31,2019	March 31,2019
	Accounts receivable 1,867,773 $ 136,269 94,323 24,774 17,155 9,794 2,150,088 $	Accounts receivable 1,742,504 $ 132,048 17,213 34,628 7,576 7,796 1,941,765 $		Accounts receivable 1,328,476 $ 384,478 48,918 129,629 28,234 18,239 1,937,974 $	Notes receivable
					35,504 $ - - - - -
					35,504 $

The above ageing analysis was based on past due date.

• B. As of March 31, 2020, December 31, 2019 and March 31, 2019, accounts receivable and notes receivable were all from contracts with customers. As of January 1, 2019, the balance of receivables from contracts with customers amounted to $2,126,557.

• C. As at March 31, 2020, December 31, 2019 and March 31, 2019, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the Group’s notes receivable were $21,181, $25,343 and $35,504, and accounts receivable were $2,141,491, $1,934,508 and $1,924,199, respectively.

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

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(4) Inventories

Raw materials Work in progress Finished goods Merchandise Raw materials Work in progress Finished goods Merchandise Raw materials Work in progress Finished goods Merchandise	Allowance for Cost valuation loss 801,289 $ 103,703) ($ 172,084 104) ( 4,530 - 22,301 3,571) ( 1,000,204 $ 107,378) ($ Allowance for Cost valuation loss 753,534 $ 97,696) ($ 63,829 108) ( 4,146 - 18,152 3,424) ( 839,661 $ 101,228) ($ December 31,2019 March 31, 2019 March 31,2020	Book value
		697,586 $ 171,980 4,530 18,730
		892,826 $
		Book value 655,838 $ 63,721 4,146 14,728
		738,433 $
	Allowance for Cost valuation loss 873,572 $ 85,950) ($ 130,497 1,428) ( 6,139 284) ( 10,001 3,595) ( 1,020,209 $ 91,257) ($	Book value
		787,622 $ 129,069 5,855 6,406
		928,952 $

The cost of inventories recognised as expense for the year:

Cost of goods sold Loss on obsolete inventory	Three months ended March 31	Three months ended March 31
	2020 505,063 $ 6,272 511,335 $	2019
		403,612 $ 5,179
		408,791 $

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(5) Property, plant and equipment

At January 1 Cost Accumulated depreciation Opening net book amount as at January 1 Additions Transfers from inventory Disposals Depreciation charge Net exchange differences Closing net book amount as at March 31 At March 31 Cost Accumulated depreciation				2020
	Land 1,166,021 $ - 1,166,021 $ 1,166,021 $ - - - - - 1,166,021 $ 1,166,021 $ - 1,166,021 $	Buildings and structures	Machinery and equipment	Transportation equipment	Office equipment
		921,538 $ 231,592) ( 689,946 $ 689,946 $ - - - 4,526) ( - 685,420 $ 921,538 $ 236,118) ( 685,420 $	372,789 $ 226,871) ( 145,918 $ 145,918 $ 3,579 5,862 221) ( 4,555) ( 2,440) ( 148,143 $ 399,595 $ 251,452) ( 148,143 $	5,789 $ 3,643) ( 2,146 $ 2,146 $ - - - 120) ( 23) ( 2,003 $ 5,680 $ 3,677) ( 2,003 $	229,006 $ 141,942) ( 87,064 $ 87,064 $ 2,774 723) ( 91) ( 7,205) ( 21) ( 81,798 $ 224,954 $ 143,156) ( 81,798 $

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At January 1 Cost Accumulated depreciation Opening net book amount as at January 1 Additions Transfers from inventory Disposals Depreciation charge Net exchange differences Closing net book amount as at March 31 At March 31 Cost Accumulated depreciation				2019
	Land 1,166,021 $ - 1,166,021 $ 1,166,021 $ - - - - - 1,166,021 $ 1,166,021 $ - 1,166,021 $	Buildings and structures	Machinery and equipment	Transportation equipment	Office equipment
		921,538 $ 213,488) ( 708,050 $ 708,050 $ - - - 4,527) ( - 703,523 $ 921,538 $ 218,015) ( 703,523 $	396,905 $ 244,108) ( 152,797 $ 152,797 $ 6,749 3,887 2,531) ( 6,658) ( 5,030 159,274 $ 423,379 $ 264,105) ( 159,274 $	5,810 $ 3,764) ( 2,046 $ 2,046 $ 944 - 77) ( 167) ( 52 2,798 $ 6,101 $ 3,303) ( 2,798 $	226,481 $ 131,781) ( 94,700 $ 94,700 $ 1,062 9,111 484) ( 7,606) ( 57 96,840 $ 221,228 $ 124,388) ( 96,840 $

A. Each property, plant and equipment does not include significant components.

B. Information about the property, plant and equipment that were pledged to others as collateral is provided in Note 8.

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－ (6) Leasing arrangements lessee

• A. The Group leases offices and rental contracts are typically made for periods from 2019 to 2025. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes.

• B. Short-term leases pertain to leases of dormitories and company cars with a lease term of not more than 12 months.

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

Buildings Buildings	March 31,2020 Carryingamount 60,516 $	December 31, 2019 December 31, 2019 Carryingamount Carrying amount 61,824 $ 7,226 $ Three months ended March 31	December 31, 2019
			Carrying amount
			7,226 $
		2020 Depreciation charge 6,317 $	2019
			Depreciation charge
			5,484 $

• D. For the three months ended March 31, 2020, the additions to right-of-use assets was $5,208.

• E. The information on profit and loss accounts relating to lease contracts is as follows:

Items affecting profit or loss Interest expense on lease liabilities Expense on short-term lease contracts	Three months ended March 31	Three months ended March 31
	2020 338 $ 2,196 $	2019
		155 $
		3,127 $

• F. For the three months ended March 31, 2020 and 2019, the Group’s total cash outflow for leases were $9,584 and $5,640, respectively.

(7) Other payables

Salaries and bonus payable Employees’compensation and directors’remuneration payable Others	March 31,2020 December 31,2019 95,224 $ 171,933 $ 35,759 27,862 72,973 76,820 203,956 $ 276,615 $	March 31,2019
		69,597 $ 71,246 85,518
		226,361 $

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(8) Pensions

A. Defined benefit plan

• (a) The Company has a defined benefit pension plan in accordance with the Labor Standards Act, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Act. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company contributes monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company will make contributions for the deficit by next March.

• (b) For the aforementioned pension plan, the Group recognised pension costs of $111 and $133 for the three months ended March 31, 2020 and 2019, respectively.

• (c) Expected contributions to the defined benefit pension plan of the Group for the year ending December 31, 2021 amount to $2,274.

B. Defined contribution plan

• (a) Effective July 1, 2005, the Company has established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company contributes monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.

• (b) The subsidiaries, DOLI, TIL, TRU, TRE, TRJ and TRM, have no pension plan, and its local laws have no compulsory requirements on the establishment of a pension plan. However, the Company’s Mainland China subsidiaries, TRI (SHENZHEN), TRI (SUZHOU) and TRI (SHANGHAI), have defined contribution plans. Monthly contributions to an independent fund administered by the government in accordance with the pension regulations in the People’s Republic of China (PRC) are based on a certain percentage of employees’ monthly salaries and wages. Other than the monthly contributions, the Group has no further obligations. The pension costs under the defined contribution pension plans of the Group for the three months ended March 31, 2020 and 2019 were $6,396 and $6,001, respectively.

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(9) Share capital

The Company’s authorised capital was $2,500,000. As of March 31, 2020, the Company’s outstanding capital was $2,362,160.

(10) Capital surplus

Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Act requires that the amount of capital surplus to be capitalised mentioned above should not exceed 10% of the paidin capital each year. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

(11) Retained earnings

• A. Under the Company’s Articles of Incorporation, the dividend policy of the Company is based on the Company’s future capital expenditure budget and capital requirements. Dividends shall be appropriated from accumulated distributable earnings, and the distribution amount shall not be lower than 60% of accumulated distributable earnings, of which cash dividends shall not be lower than 50% of the total dividends distributed. The current year’s earnings, if any, shall first be used to pay all taxes and offset prior years’ operating losses and then 10% of the remaining amount shall be set aside as legal reserve until the amount of legal reserve is equal to the amount of total capital. After the provision or reversal of special reserve, the remaining earnings constitute the distributable earnings of the current year. The appropriation of the remaining earnings along with the unappropriated earnings of prior years shall be proposed by the Board of Directors and approved by the stockholders at the stockholders’ meeting.

• B. The appropriations of 2019 earnings had been proposed by the Board of Directors on February 26, 2020 and the appropriations of 2018 earnings had been resolved at the stockholders’ meeting on May 29, 2019. Details are summarised below:

Legal reserve Special reserve Cash dividends	Year ended December 31	Year ended December 31	Year ended December 31
	Dividends per Amount share(in dollars) 93,344 $ 25,476 $ 779,513 $ 3.3 $ 2019	2018
	Amount 93,344 $ 25,476 $ 779,513 $	Amount 106,440 $ 11,671 $ 873,999 $	Dividends per share(in dollars)
			3.7 $

• C. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the distribution of the reserve is limited to the portion in

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excess of 25% of the Company’s paid-in-capital.

• D. (a) In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.

• (b) The amounts previously set aside by the Company as special reserve on initial application of IFRSs in accordance with Jin-Guan-Zheng-Fa-Zi Letter No. 1010012865, dated April 6, 2012, shall be reversed proportionately when the relevant assets are used, disposed of or reclassified subsequently.

• E. For the information relating to employees’ compensation and directors’ remuneration, please refer to Note 6(16).

(12) Operating revenue

Revenue from contracts with customers	2020 2019 1,162,501 $ 976,359 $ Three months ended March 31

• A. Disaggregation of revenue from contracts with customers

The Group derives revenue from the transfer of goods and services at a point in time in the following major geographical regions:

Asia America Europe Others	Three months ended March 31	Three months ended March 31
	2020 1,076,274 $ 20,966 58,280 6,981 1,162,501 $	2019
		855,431 $ 32,949 84,647 3,332
		976,359 $

B. Contract liabilities

The Group has recognised the following revenue-related contract liabilities:

Contract liabilities	March 31,2020 December 31,2019 21,942 $ 48,694 $	March 31,2019 22,135 $	January1,2019
			39,634 $

For the three months ended March 31, 2020 and 2019, the Group’s contract liabilities on January 1, 2020 and 2019 were realised to revenue amounting to $47,814 and $30,991, respectively.

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(13) Other income

Interest income from bank deposits Rental income Other income	2020 2019 2,100 $ 1,787 $ 1,497 - 4,458 11,060 8,055 $ 12,847 $ Three months ended March 31

(14) Other gains and losses

		Three months ended March 31	Three months ended March 31
		2020	2019
Losses on disposal of property, plant and
equipment	($	200)	($	697)
Net currency exchange gains		7,389		22,976
Other losses	(	1)	(	10,267)
	$	7,188	$	12,012

(15) Expenses by nature

Employee benefit expense Depreciation charges on property, plant and equipment and right-of-use assets Amortisation charges on intangible assets	2020 2019 230,980 $ 216,438 $ 26,410 27,899 2,960 2,384 260,350 $ 246,721 $ Three months ended March 31	2020 2019 230,980 $ 216,438 $ 26,410 27,899 2,960 2,384 260,350 $ 246,721 $ Three months ended March 31
		216,438 $ 27,899 2,384
		246,721 $

(16) Employee benefit expense

Wages and salaries Labour and health insurance fees Pension costs Other personnel expenses	Three months ended March 31	Three months ended March 31
	2020 198,404 $ 16,987 6,507 9,082 230,980 $	2019
		183,187 $ 18,032 6,134 9,085
		216,438 $

A. In accordance with the amendments of the Articles of Incorporation, which was approved by the shareholders during their meeting on May, 29, 2019, a ratio of distributable profit of the current year, after covering accumulated losses, shall be distributed as employees’ compensation and directors’ remuneration. The ratio shall not be lower than 1% for employees’ compensation and shall not be higher than 2% for directors’ remuneration.

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• B. For the three months ended March 31, 2020 and 2019, employees’ compensation was accrued at $5,212 and $4,625, respectively; while directors’ remuneration was accrued at $2,685 and $2,383, respectively. The aforementioned amounts were recognised in salary expenses. The employees’ compensation and directors’ remuneration were estimated and accrued based on the distributable profit of current year for the three months ended March 31, 2020 and 2019 and the percentage as prescribed by the Company’s Articles of Incorporation.

The employees’ compensation and directors’ remuneration for 2019 as resolved by the Board of Directors on February 26, 2020 amounting to $18,389 and $9,473, respectively, were in agreement with those amounts recognised in the 2019 financial statements.

Information about employees’ compensation and directors’ remuneration of the Company as resolved by the Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(17) Income tax

• A. Income tax expense

• (a) Components of income tax expense:

			Three months	ended March 31	ended March 31
			2020		2019
Current tax:
Current tax on profit for the period		$	59,691	$	44,991
Deferred tax:
Origination and reversal of temporary differences			3,683		17,892
Income tax expense		$	63,374	$	62,883
The income tax (charge)/credit relating to components of other comprehensive income is as
follows:
		Three months ended March 31
		2020			2019
Currency translation differences	($		1,928) $		3,627

• (b) The income tax (charge)/credit relating to components of other comprehensive income is as follows:

• B. The Company’s income tax returns through 2016 have been assessed and approved by the Tax Authority.

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(18) Earnings per share

Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Assumed conversion of all dilutive potential ordinary shares Employees’ compensation Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Assumed conversion of all dilutive potential ordinary shares Employees’ compensation Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares

Weighted average number of ordinary shares outstanding (shares in Earnings per share Amount after tax thousands) (in dollars) 270,151 $ 236,216 1.14 $ - 344 270,151 $ 236,560 1.14 $ Weighted average number of ordinary shares outstanding (shares in Earnings per share Amount after tax thousands) (in dollars) 238,398 $ 236,216 1.01 $ - 764 238,398 $ 236,980 1.01 $ Three months ended March 31,2020 Three months ended March 31,2019

Amount after tax 238,398 $ - 238,398 $

As employees’ compensation could be distributed in the form of stock, the diluted EPS computation shall include those estimated shares that would increase from employees’ stock compensation issuance in the calculation of the weighted-average number of common shares outstanding during

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the reporting year, taking into account the dilutive effect of stock compensation on potential common shares.

7. RELATED PARTY TRANSACTIONS

(1) Parent and ultimate controlling party

The Company shares are widely held. The Company does not have an ultimate parent and ultimate controlling party.

(2) Key management compensation

Key management compensation
		Three months	ended	March 31
		2020		2019
Salaries and other short-term employee
benefits	$	9,520	$	7,350
Post-employment benefits		193		118
	$	9,713	$	7,468

• A. Salaries and other short-term employee benefits include regular wages, special responsibility allowances, various bonuses, service execution fees, directors’ and supervisors’ remuneration and employees’ compensation, etc.

• B. Post-employment benefits represent pension costs.

8. PLEDGED ASSETS

The Group’s assets pledged as collateral are as follows:

Pledged asset			Book value	March 31,2019 Purpose 388,990 $ Security for lines of credit 53,329 " 3,082 Performance bond 445,401 $	Purpose
		March 31,2020 388,990 $ 51,736 - 440,726 $	December 31,2019 388,990 $ 52,135 2,998 444,123 $
Property, plant and equipment - Land - Buildings Time deposits (shown as “Other current assets”)

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS

• (1) Contingencies

None.

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(2) Commitments

None.

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

None.

12. OTHERS

(1) Capital management

The Group’s main objectives when managing capital are to ensure solid and good capital ratio in order to support operations and to provide maximum returns for shareholders. The Group manages and adjusts capital structure based on economic situation and debt ratio, and achieves the purpose of maintaining and adjusting capital structure possibly by adjusting dividend payment or shares issuance.

(2) Financial instruments

A. Financial instruments by category

Financial instruments by category
0 Financial assets Financial assets at amortised cost Cash and cash equivalents Financial assets at amortised cost Notes receivable Accounts receivable Other receivables Guarantee deposits paid (shown as 'non-current assets') Other financial assets (shown as 'current assets') Financial liabilities Financial liabilities at amortised cost Notes payable Accounts payable Other payables Lease liabilities (including current portion)	March 31,2020 1,412,870 $ 225,547 21,181 2,141,491 27,814 9,794 - 3,838,697 $ 30,520 $ 719,187 203,956 953,663 $ 59,731 $	December 31,2019 1,300,530 $ 204,777 25,343 1,934,508 21,016 11,591 2,998 3,500,763 $ 26,398 $ 455,746 276,615 758,759 $ 61,522 $	March 31,2019
			1,395,704 $ 125,970 35,504 1,924,199 22,532 8,398 3,082
			3,515,389 $
			20,916 $ 450,414 226,361
			697,691 $
			7,064 $

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• B. Financial risk management policies

The Group adopts an overall risk management and control system to identify and measure a variety of financial risks including market risk, credit risk, liquidity risk and cash flow interest rate risk.

• C. Significant financial risks and degrees of financial risks

• (a) Market risk

Foreign exchange risk

• i. The Group operates internationally and is exposed to exchange rate risk arising from the transactions of the Company and its subsidiaries used in various functional currency, primarily with respect to the USD, RMB, JPY and EUR. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities.

• ii. The Group’s businesses involve some non-functional currency operations. The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

(Remainder of page intentionally left blank)

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(Foreign currency: functional currency) Financial assets Monetary items USD:NTD RMB:NTD JPY:NTD Non-monetary items USD:NTD EUR:NTD JPY:NTD MYR:NTD KRW:NTD RMB:NTD Financial liabilities Monetary items USD:NTD RMB:NTD EUR:NTD			March 31,2020	March 31,2020	March 31,2020
	Foreign currency amount (in thousands) 47,879 $ 130,288 61,235 1,636 846 50,232 2,124 398,956 163,137 1,448 $ 54,220 550	Exchange rate 30.23 4.26 0.28 30.23 33.24 0.28 6.72 0.03 4.26 30.23 4.26 33.24	Book value (NTD) 1,447,143 $ 554,375 17,072 49,441 28,105 14,005 14,266 9,974 694,146 43,766 $ 230,706 18,282	SensitivityAnalysis
				Degree of variation 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%	Effect on profit of loss 14,471 $ 5,544 171 - - - - - - 438 $ 2,307 183	Effect on other comprehensive income
						- $ - - 494 281 140 143 100 6,941 - $ - -

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(Foreign currency: functional currency) Financial assets Monetary items USD:NTD RMB:NTD JPY:NTD Non-monetary items USD:NTD EUR:NTD JPY:NTD MYR:NTD RMB:NTD Financial liabilities Monetary items USD:NTD RMB:NTD EUR:NTD			December	31,2019	31,2019
	Foreign currency amount (in thousands) 38,719 $ 165,175 47,799 1,554 915 54,328 2,252 164,366 2,378 $ 85,250 408	Exchange rate 29.98 4.31 0.28 29.98 33.59 0.28 7.03 4.31 29.98 4.31 33.59	Book value (NTD) 1,160,796 $ 711,078 13,193 46,594 30,734 14,995 15,835 707,595 71,292 $ 367,001 13,705	SensitivityAnalysis
				Degree of variation 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%	Effect on profit of loss 11,608 $ 7,111 132 - - - - - 713 $ 3,670 137	Effect on other comprehensive income
						- $ - - 466 307 150 158 7,076 - $ - -

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(Foreign currency: functional currency) Financial assets Monetary items USD:NTD RMB:NTD EUR:NTD JPY:NTD Non-monetary items USD:NTD EUR:NTD JPY:NTD MYR:NTD RMB:NTD Financial liabilities Monetary items USD:NTD RMB:NTD EUR:NTD JPY:NTD			March 31,2019	March 31,2019	March 31,2019
	Foreign currency amount (in thousands) 34,807 $ 385,331 473 56,499 1,083 785 45,282 1,922 171,527 3,868 $ 237,376 298 61,578	Exchange rate 30.82 4.58 34.61 0.28 30.82 34.61 0.28 7.27 4.58 30.82 4.58 34.61 0.28	Book value (NTD) 1,072,752 $ 1,764,816 16,364 15,724 33,364 27,175 12,602 13,979 799,957 119,212 $ 1,087,182 10,330 17,137	SensitivityAnalysis
				Degree of variation 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%	Effect on profit of loss 10,728 $ 17,648 164 157 - - - - - 1,192 $ 10,872 103 171	Effect on other comprehensive income
						- $ - - - 334 272 126 140 8,000 - $ - - -

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• iii. Total exchange gain, including realised and unrealised arising from significant foreign exchange variation on the monetary items held by the Group for the three months ended March 31, 2020 and 2019 amounted to $7,389 and $22,976, respectively.

Price risk

The Group has no equity instruments held for trading; thus, the Group has no price risk.

Cash flow and fair value interest rate risk

The Group has no borrowings; thus, the Group has no cash flow and fair value interest rate risk.

• (b) Credit risk

• i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms, and the contract cash flows of debt instruments stated at amortised cost.

• ii. The Group’s credit risk management policy is that for banks and financial institutions, only institutions with good credit rating are accepted. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board of Directors. The utilisation of credit limits is regularly monitored.

• iii. In accordance with the internal management policy of the Group, if the contract payments were past due over 120 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.

• iv. In accordance with the internal management policy of the Group, the default occurs when the contract payments are past due over 365 days.

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

  • (i) It becomes probable that the issuer will enter bankruptcy or other financial reorganization due to their financial difficulties;

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

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

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• vi. The Group classifies customer’s accounts receivable in accordance with credit risk on trade. The Group applies the modified approach using provision matrix, loss rate methodology to estimate expected credit loss under the provision matrix basis.

• vii. The Group wrote-off the financial assets, which cannot be reasonably expected to be recovered, after initiating recourse procedures. However, the Group will continue executing the recourse procedures to secure their rights.

• viii.The Group used the forecastability to adjust historical and timely information to assess the default possibility of accounts receivable. On March 31, 2020, December 31, 2019 and March 31, 2019, the provision matrix, loss rate methodology is as follows:

Group A:

Group A:
Group B: Expected loss rate Total book value Loss allowance Expected loss rate Total book value Loss allowance Expected loss rate Total book value Loss allowance March 31, 2019 March 31, 2020 December 31, 2019 Expected loss rate Total book value Loss allowance	Not 1~60 days 61~90 days 91~180 days 181~365 days Over 365 days past due past due past due past due past due past due Total 0.02%-0.03% 1.5% 15% 25% 40% 60%-100% 459,534 $ 38,906 $ 54,242 $ 2,516 $ 1,175 $ 3,181 $ 559,554 $ 114 418 968 629 470 2,399 4,998 Not 1~60 days 61~90 days 91~180 days 181~365 days Over 365 days past due past due past due past due past due past due Total 0.03%-0.19% 1.5% 15% 25% 40% 60~100% 419,864 $ 19 $ - $ 1,132 $ 5,767 $ 1,290 $ 428,072 $ 812 - - 283 2,307 918 4,320 Not 1~60 days 61~90 days 91~180 days 181~365 days Over 365 days past due past due past due past due past due past due Total 0.21% 1.5% 15% 25% 40% 60%-100% 453,440 $ 14,326 $ 3,700 $ - $ 7,471 $ 7,377 $ 486,314 $ 943 2,105 555 - 2,988 4,426 11,017 March 31,2020 December 31,2019 March 31,2019 0.02%-0.22% 0.03%-0.19% 0.03%-0.21% 1,590,534 $ 1,513,693 $ 1,325,660 $ 3,599 2,937 2,758	Total
		559,554 $ 4,998 Total
		428,072 $ 4,320 Total
	$

Group B:

Group A: Customers excluding Group B.

Group B: Domestic and foreign clients that have good operating conditions, high degree of financial transparency, proceeds of collections of transaction and are rated with optimised internal credit rating. The default possibility that the Group used the forecastability to adjust historical and timely information to assess was 0.03%,

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which was used to assess the default possibility of accounts receivable.

• ix. Movements in relation to the Group applying the simplified approach to provide loss allowance for accounts receivable are as follows:

		2020			2019
At January 1	$		7,257	$		27,883
Provision for impairment			1,416			-
Reversal of impairment loss			-	(		14,329)
Effect of exchange rate changes	(		76)			221
At March 31	$		8,597	$		13,775

• c) Liquidity risk

• i. Cash flow forecasting is performed and aggregated by the Group’s treasury. Surplus cash held by the operating entities over and above balance required for working capital management are invested in interest bearing current accounts and time deposits, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by the abovementioned forecasts.

• ii. The table below analyses the Group’s non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

March 31, 2020 Notes payable Accounts payable Other payables Lease liabilities December 31, 2019 Notes payable Accounts payable Other payables Lease liabilities March 31, 2019 Notes payable Accounts payable Other payables Lease liabilities Non-derivative financial liabilities: Non-derivative financial liabilities:	Less than 1year $ 30,520 719,187 203,956 26,317 Less than 1year $ 26,398 455,746 276,615 23,594 Less than 1year $ 20,916 450,414 226,361 7,064	Over 1year
		$ - - - 40,102 Over 1year
		$ - - - 44,892 Over 1year
		$ - - - -

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(3) Fair value information

• A. The Group has no financial instruments measured at fair value by valuation method.

• B. The carrying amounts of cash and cash equivalents, financial assets at amortised cost, notes receivable, accounts receivable, other receivables, notes payable, accounts payable and other payables are approximate to their fair values.

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

• A. Loan to others: Please refer to table 1.

• B. Provisions of endorsements and guarantees to others: None.

• C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): None.

• D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company’s paid-in capital: None.

• E. Acquisition of real estate reaching $300 million or 20% of paid-in capital or more: None.

• F. Disposal of real estate reaching $300 million or 20% of paid-in capital or more: None.

• G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more: None.

• H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 2.

• I. Trading in derivative instruments undertaken during the reporting periods: None.

• J. Significant inter-company transactions during the reporting periods: Please refer to table 3.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 4.

(3) Information on investments in Mainland China

• A. Basic information: Please refer to table 5.

• B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: Please refer to Table 2 to 4.

(4) Major shareholders information

Major shareholders information: Please refer to Table 6.

~35~

14. SEGMENT INFORMATION

(1) General information

The Group is primarily engaged in the design, assembly, manufacture, sales, repairs and maintenance of automated inspection and testing equipment. The Group operates business only in a single industry. The Board of Directors who allocates resources and assesses performance of the Group as a whole, has identified that the Group has only one reportable operating segment.

(2) Measurement of segment information

The accounting policies of the operating segments and the Group are the same. The Group uses the operating profit as the measurement for operating segment profit and the basis of performance assessment.

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

The segment information provided to the chief operating decision maker for the reportable segments is as follows:

Revenue from external customers Segment profit	Three months ended March 31	Three months ended March 31
	2020 1,162,501 $ 318,620 $	2019
		976,359 $
		276,577 $

The total assets and total liabilities amount were not provided to the chief operating decision maker by the Company.

(4) Reconciliation for segment income (loss)

Net profit (loss) of segments reported to the chief operating decision maker is measured in a manner consistent with revenues and expenses in the income statement. A reconciliation of segment profit (loss) to profit (loss) before tax and discontinued operations is provided as follows:

Reportable segments income Unallocated profit or loss: Non-operating income and expenses Income before tax from continuing operations	Three months ended March 31	Three months ended March 31
	2020 318,620 $ 14,905 333,525 $	2019
		276,577 $ 24,704
		301,281 $

~36~

Test Research, Inc. and Subsidiaries

Table 1

Loans to others

Three months ended March 31, 2020

Expressed in thousands of NTD (Except as otherwise indicated)

No. Creditor Borrower General ledger account Is a related party Maximum outstanding balance during the three months ended March 31, 2020 Balance at March 31, 2020 Actual amount drawn down Interest rate Nature of loan Amount of transactions with the borrower Reason for short-term financing Allowance for doubtful accounts	Collateral	Limit on loans granted to a singleparty	Ceiling on total loans granted	Footnote
	Item Value
1 TRI Electronic (Shanghai) Limited TRI Electronic (Suzhou) Limited Other receivables Yes 25,944 $ 25,530 $ 25,530 $ 4.75% Short-term financing - $ Additional operating capital - $	None - $	564,487 $	1,128,974 $	Note 1

Note 1:

The Board of Directors resolved to amend TRI Electronic (Shanghai) Limited's policy “Procedures for Provision of Loans” and the policy is as follows:

Ceiling on total loans to others: 50% of the creditor's net worth. For business transactions, if for short-term financing purpose, the ceiling on loans shall not exceed 40% of the creditor's net worth. Limit to a single party is RMB 4 million. However, limit on loans for financing granted by and to subsidiaries with the same ultimate parent which directly or indirectly holds 100% of its voting shares shall not exceed 20% of parent company's net worth. Ceiling to the aforementioned single party shall not exceed 10% of parent company's net worth.

Table 1 Page 1

Test Research, Inc. and Subsidiaries

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

Three months ended March 31, 2020

Table 2 Creditor	Counterparty	Relationship with the counterparty	Balance as at March 31,2020	Turnover rate	Overdue receivables	Overdue receivables	Amount collected subsequent to the balance sheet date (Note) Allowance for doubtful accounts Expressed in thousands of NTD (Except as otherwise indicated)	Amount collected subsequent to the balance sheet date (Note) Allowance for doubtful accounts Expressed in thousands of NTD (Except as otherwise indicated)
					Amount	Action taken
Test Research, Inc. Test Research, Inc. DOLI TRADING LIMITED	DOLI TRADING LIMITED TRI Electronic (Suzhou) Limited TRI Electronic (Suzhou) Limited	Subsidiary Second-tier subsidiary Same ultimate parent company	218,598 $ 117,177 162,735	0.01 1.54 0.00	217,204 $ 30,024 162,735	In the process of collection In the process of collection In the process of collection	136,104 $ 4,121 50,868	- $ - -

Note: The subsequent collections were reviewed prior to the opinion date.

Table 2 Page 1

Test Research, Inc. and Subsidiaries

Significant inter-company transactions during the reporting period

Three months ended March 31, 2020

Table 3 Number (Note 1)	Companyname	Counterparty	Relationship (Note 2)		Transactions Expressed in thousands of NTD (Except as otherwise indicated)	Transactions Expressed in thousands of NTD (Except as otherwise indicated)	Transactions Expressed in thousands of NTD (Except as otherwise indicated)
				General ledger account	Amount(Note 4)	Transaction terms	Percentage of consolidated total operating revenues or total assets
0 0 0 0 0 0 0 1 2 3 4	Test Research, Inc. Test Research, Inc. Test Research, Inc. Test Research, Inc. Test Research, Inc. Test Research, Inc. Test Research, Inc. DOLI TRADING LIMITED TRI Electronic (Shenzhen) Limited TRI Electronic (Shanghai) Limited TEST RESEARCH USA, INC.	TRI Electronic (Suzhou) Limited TRI Electronic (Shenzhen) Limited TRI JAPAN CORPORATION DOLI TRADING LIMITED TRI Electronic (Suzhou) Limited TRI Electronic (Shenzhen) Limited TRI JAPAN CORPORATION TRI Electronic (Suzhou) Limited Test Research, Inc. TRI Electronic (Suzhou) Limited Test Research, Inc.	1 1 1 1 1 1 1 3 2 3 2	Sales revenue Sales revenue Sales revenue Accounts receivable Accounts receivable Accounts receivable Accounts receivable Accounts receivable Service revenue Other receivables Service revenue	38,054 $ 51,735 10,896 218,598 117,177 34,098 10,159 162,735 23,964 25,530 12,521	Note 3 Note 3 Note 8 Note 3 Note 3 Note 3 Note 8 Note 3 Note 6 and 7 Note 5 Note 6	3 4 1 3 2 - - 2 2 - 1

Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows:

• (1) Parent company is ‘0’.

• (2) The subsidiaries are numbered in order starting from ‘1’.

Note 2: Relationship between transaction company and counterparty is classified into the following two categories:

• (1) Parent company to subsidiary.

• (2) Subsidiary to parent company.

• (3) Subsidiary to subsidiary.

• Note 3: The purchases from the Company will be resold to the indirect 100% owned companies of TRI, and the price is 40%-70% of standard prices; otherwise, the price is 91% of final sales price. The collection terms are 90-120 days after acceptance and are similar to third parties.

Note 4: Only related party transactions in excess of $10,000 are disclosed. Corresponding transactions from the other side are not disclosed.

Note 5: Loans to others.

• Note 6: Companies signed agency agreements with subsidiaries and second-tier subsidiary, and the subsidiaries and second-tier subsidiary act as product sales agent. Note 7: Commission revenue was based on agency contract, others were based on agreed conditions.

Note 8: Transaction items follow the agreement.

Table 3 Page 1

Test Research, Inc. and Subsidiaries

Table 4

Information on investees

Three months ended March 31, 2020

Expressed in thousands of NTD (Except as otherwise indicated)

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held as at March31,2020	Shares held as at March31,2020	Shares held as at March31,2020	Net profit (loss) of the investee for the three months ended March 31,2020	Investment income (loss) recognised by the Company for the three months ended March 31, 2020	Footnote
				Balance as at March31,2020	Balance as at December 31, 2019	Number of shares	Ownership (%)	Bookvalue
Test Research, Inc. Test Research, Inc. Test Research, Inc. Test Research, Inc. Test Research, Inc. Test Research, Inc. Test Research, Inc.	TRI INVESTMENTS LIMITED DOLI TRADING LIMITED TEST RESEARCH USA, INC. TRI TEST RESEARCH EUROPE GMBH TRI JAPAN CORPORATION TRI MALAYSIA SDN. BHD TRI KOREA CO., Ltd.	Samoa British Virgin Islands United States Germany Japan Malaysia Korea	Investment holdings Trading Trading Trading Trading Trading Trading	219,811 $ 131,973 61,299 17,679 10,750 2,066 10,750	219,811 $ 131,973 61,299 17,679 10,750 2,066 -	6,724,109 801 1,518,935 - 720 1,000,000 80,000	100 100 100 100 100 100 100	655,001 $ 39,145 49,441 28,105 12,387 14,266 9,974	7,062) ($ 3,774 2,457 2,308) ( 1,132) ( 882) ( 27) (	6,903) ($ 5,217 2,457 2,308) ( 1,132) ( 882) ( 27) (	None Note 2 None Note 1 None None None

Note 1: A limited liability company.

Note 2: The investment loss included the elimination of intercompany transactions.

Table 4 Page 1

Test Research, Inc. and Subsidiaries

Information on investments in Mainland China - Basic information

Three months ended March 31, 2020

Table 5

Table 5 Investee in Mainland China	Main business activities	Paid-in capital (Note 3)	Investment method (Note 1)	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2020 (Note 3)	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the three months ended March 31,2020		Accumulated amount of remittance from Taiwan to Mainland China as of March 31, 2020(Note 3)	Net income of investee for the three months ended March 31, 2020	Ownership held by the Company (direct or indirect)	Investment income recognised by the Company for the three months ended March 31, 2020(Note 2(2)C.)	Book value of investments in Mainland China as of March 31, 2020(Note 5) Accumulated amount of investment income remitted back to Taiwan as of March 31,2020 Expressed in thousands of NTD (Except as otherwise indicated) Footnote
					Remitted to Mainland China	Remitted back to Taiwan
TRI Electronic (Shenzhen) Limited TRI Electronic (Suzhou) Limited TRI Electronic (Shanghai) Limited	Manufacture and sales of test equipment Manufacture and sales of test equipment Import and export of equipment, consulting and after-sale maintenance service of equipment	$ 92,186 78,250 117,878	2 2 2	$ 22,669 60,450 117,878	$ - - -	$ - - -	$ 22,669 60,450 117,878	($ 203) ( 5,678) ( 1,181)	100 100 100	($ 203) ( 5,678) ( 1,181)	$ 507,960 74,814 69,466	$ - - -	Note 5 Note 5 Note 5

Companyname	Accumulated amount of remittance from Taiwan to Mainland China as of March 31, 2020 (Note 3)	Investment amount approved by the Investment Commission of the Ministry of Economic Affairs (MOEA) (Note 3)	Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA (Note 4)
Test Research, Inc.	$ 200,997	$ 276,688	$ 3,386,922

Note 1: Investment methods are classified into the following three categories:

• (1) Directly invest in a company in Mainland China.

• (2) Through investing in an existing company in the third area, which then invested in the investee in Mainland China. (Reinvested through TRI INVESTMENTS LIMITED) (3) Others.

• Note 2: In the ‘Investment income (loss) recognised by the Company for the three months ended March 31, 2020’ column:

• (1) It should be indicated if the investee was still in the incorporation arrangements and had not yet any profit during this period.

• (2) Indicate the basis for investment income (loss) recognition in the number of one of the following three categories:

• A. The financial statements were audited and attested by international accounting firm which has cooperative relationship with accounting firm in R.O.C.

• B. The financial statements were audited and attested by R.O.C. parent company’s CPA.

• C. It was recognised based on the unreviewed self-prepared financial statements provided by the investee.

• Note 3: The amount was originally denominated in USD and was translated to NTD at the exchange rate (1:30.23) prevailing at the balance sheet date. Note 4: The highest of $80,000, 60% of the stockholder's equity and 60% of consolidated net assets.

• Note 5: Including net changes of realised and unrealised profit from sales.

Table 5 Page 1

Test Research, Inc. and Subsidiaries

Major shareholders information

March 31, 2020

Table 6

Table 6
Name of major shareholders Shares	Number of shares held	Ownership (%)
Chieh-Yuan, Chen	37,889,235	16.04%
Mei-Hsing, Yeh	17,338,054	7.34%
Der-Hsin Investment Co., Ltd.	13,464,174	5.69%

• Note 1: The major shareholders information was derived from the data that the Company issued common shares (including treasury shares) and preference shares in dematerialised form which were registered and held by the shareholders above 5% on the last operating date of each quarter and was calculated by Taiwan Depository & Clearing Corporation. The share capital reflected in the financial statements may be different from the actual number of shares in dematerialised form due to the difference in the calculation basis.

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

Table 6 Page 1