TRI - Interim / Quarterly Report 2020

TEST RESEARCH, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS’ REVIEW REPORT JUNE 30, 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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INDEPENDENT AUDITORS' REVIEW REPORT TRANSLATED FROM CHINESE

PWCR 20001094

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 June 30, 2020 and 2019, and the related consolidated statements of comprehensive income for the three months and six months then ended, as well as the consolidated statements of changes in equity and of cash flows for the six 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 auditors. Those statements reflect total assets of NT$1,229,794 thousand and NT$1,530,382 thousand, constituting 16% and 22% of the consolidated total assets, and total liabilities of NT$131,323 thousand and NT$82,462 thousand, constituting 5% and 4% of the consolidated total liabilities as at June 30, 2020 and 2019, respectively, and total comprehensive income of NT$51,266 thousand, NT$11,044 thousand, NT$47,530 thousand and NT$26,289 thousand, constituting 14%, 4%, 8% and 5% of the consolidated total comprehensive income for the three months and six 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 auditors, 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 June 30, 2020 and 2019, and of its consolidated financial performance for the three months and six months then ended, and its consolidated cash flows for the six 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 August 5, 2020

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 independent auditors’ report 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

JUNE 30, 2020, DECEMBER 31, 2019 AND JUNE 30, 2019

(Expressed in thousands of New Taiwan dollars)

(The balance sheets as of June 30, 2020 and 2019 are reviewed, not audited)

Assets	Notes	June 30, 2019
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)	`$` `1,504,958` `215,032` `27,885` `2,159,041` `19,140` `810,767` `44,431`
		`4,781,254`
		`2,150,233` `33,213` `18,455` `68,579` `9,182`
		`2,279,662`
		`$` `7,060,916`

(Continued)

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TEST RESEARCH, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS JUNE 30, 2020, DECEMBER 31, 2019 AND JUNE 30, 2019

(Expressed in thousands of New Taiwan dollars) (The balance sheets as of June 30, 2020 and 2019 are reviewed, not audited)

	Liabilities and Equity	Notes			June 30, 2020	December 31, 2019		June 30, 2019
	Current liabilities
2130	Contract liabilities -	6(12)
	current			`$`	`30,322 $`	`48,694`	`$`	`20,174`
2150	Notes payable				`36,101`	`26,398`		`28,916`
2170	Accounts payable				`841,757`	`455,746`		`484,083`
2200	Other payables	6(7)			`1,065,661`	`276,615`		`1,151,932`
2230	Current income tax
	liabilities				`197,428`	`109,836`		`141,160`
2280	Current lease liabilities				`22,591`	`20,582`		`16,010`
2300	Other current liabilities				`7,477`	`8,943`		`7,675`
21XX	Total current liabilities				`2,201,337`	`946,814`		`1,849,950`
	Non-current liabilities
2550	Provisions for liabilities -
	non-current				`37,705`	`35,298`		`33,736`
2570	Deferred income tax
	liabilities				`107,469`	`102,193`		`100,899`
2580	Non-current lease
	liabilities				`30,932`	`40,940`		`17,060`
2600	Other non-current	6(8)
	liabilities				`60,429`	`61,358`		`56,974`
25XX	Total non-current
	liabilities				`236,535`	`239,789`		`208,669`
2XXX	Total liabilities				`2,437,872`	`1,186,603`		`2,058,619`
	Equity attributable to owners
	of the parent
	Share capital	6(9)
3110	Common stock				`2,362,160`	`2,362,160`		`2,362,160`
	Capital surplus	6(10)
3200	Capital surplus				`53,290`	`53,290`		`53,290`
	Retained earnings	6(11)
3310	Legal reserve				`1,306,390`	`1,213,046`		`1,213,046`
3320	Special reserve				`67,270`	`41,795`		`41,795`
3350	Unappropriated retained
	earnings				`1,523,357`	`1,779,411`		`1,366,407`
	Other equity interest
3400	Other equity interest		`(`		`85,644 ) (`	`67,270) (`		`34,401)`
31XX	Equity attributable to
	owners of the parent				`5,226,823`	`5,382,432`		`5,002,297`
3XXX	Total equity				`5,226,823`	`5,382,432`		`5,002,297`
3X2X	Total liabilities and
	equity			`$`	`7,664,695 $`	`6,569,035`	`$`	`7,060,916`

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

SIX MONTHS ENDED JUNE 30, 2020 AND 2019

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

					Three months ended June 30	Three months ended June 30	Three months ended June 30		Six months ended June 30	Six months ended June 30	Six months ended June 30
	Items	Notes			2020		2019		2020		2019
4000	Operating revenue	6(12)		`$`	`1,487,104`	`$`	`1,219,732`	`$`	`2,649,605`	`$`	`2,196,091`
5000	Operating costs	6(4)(15)(16)	`(`		`668,835) (`		`538,710) (`		`1,185,474) (`		`953,131 )`
5950	Net operating margin				`818,269`		`681,022`		`1,464,131`		`1,242,960`
	Operating expenses	6(15)(16)
6100	Selling expenses		`(`		`178,190) (`		`189,201) (`		`348,058) (`		`370,255 )`
6200	General and administrative expenses		`(`		`36,329) (`		`37,042) (`		`79,811) (`		`75,500 )`
6300	Research and development expenses		`(`		`100,878) (`		`111,324) (`		`213,354) (`		`191,502 )`
6450	Expected credit impairment loss (gain)	12(2)	`(`		`2,822)`		`621 (`		`4,238)`		`14,950`
6000	Total operating expenses		`(`		`318,219) (`		`336,946) (`		`645,461) (`		`622,307 )`
6900	Operating profit				`500,050`		`344,076`		`818,670`		`620,653`
	Non-operating income and expenses
7100	Interest income				`2,213`		`2,672`		`4,313`		`4,459`
7010	Other income	6(13)			`3,884`		`13,554`		`9,839`		`24,614`
7020	Other gains and losses	6(14)	`(`		`36,192) (`		`9,859) (`		`29,004)`		`2,153`
7050	Finance costs	6(6)	`(`		`263) (`		`159) (`		`601) (`		`314 )`
7000	Total non-operating income and expenses		`(`		`30,358)`		`6,208 (`		`15,453)`		`30,912`
7900	Profit before income tax				`469,692`		`350,284`		`803,217`		`651,565`
7950	Income tax expense	6(17)	`(`		`97,565) (`		`68,249) (`		`160,939) (`		`131,132 )`
8200	Profit for the period			`$`	`372,127`	`$`	`282,035`	`$`	`642,278`	`$`	`520,433`
	Other comprehensive income
	Components of other comprehensive income that will be
	reclassified to profit or loss
8361	Financial statements translation differences of foreign
	operations		`(`	`$`	`13,327) ($`		`8,890) ($`		`22,968)`	`$`	`9,243`
8399	Income tax relating to the components of other comprehensive	6(17)
	income				`2,666`		`1,778`		`4,594 (`		`1,849 )`
8300	Total other comprehensive income for the period		`(`	`$`	`10,661) ($`		`7,112) ($`		`18,374)`	`$`	`7,394`
8500	Total comprehensive income for the period			`$`	`361,466`	`$`	`274,923`	`$`	`623,904`	`$`	`527,827`
	Profit attributable to:
8610	Owners of the parent			`$`	`372,127`	`$`	`282,035`	`$`	`642,278`	`$`	`520,433`
	Comprehensive income attributable to:
8710	Owners of the parent			`$`	`361,466`	`$`	`274,923`	`$`	`623,904`	`$`	`527,827`
	Earnings per share (in dollars)	6(18)
9750	Basic earnings per share			`$`	`1.58`	`$`	`1.19`	`$`	`2.72`	`$`	`2.20`
9850	Diluted earnings per share			`$`	`1.57`	`$`	`1.19`	`$`	`2.72`	`$`	`2.20`

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 SIX MONTHS ENDED JUNE 30, 2020 AND 2019

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

	Equity attributable to owners ofthe parent	Equity attributable to owners ofthe parent	Equity attributable to owners ofthe parent	Equity attributable to owners ofthe parent	Equity attributable to owners ofthe parent	Equity attributable to owners ofthe parent
Share capital - common stock	Capital Reserves				Retained Earnings				Financial statements translation differences of foreign operations
	Total capital surplus, additional paid-in capital		Donated assets received	Legal reserve		Special reserve		Unappropriated retained earnings
`$ 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` `-` `-` `-` `106,439` `-` `-` `$ 1,213,046` `$ 1,213,046` `-` `-` `-` `93,344` `-` `-` `$ 1,306,390`		`$` `30,123` `-` `-` `-` `-` `11,672` `-` `$` `41,795` `$` `41,795` `-` `-` `-` `-` `25,475` `-` `$` `67,270`	`$ 1,838,084` `520,433` `-` `520,433` `(` `106,439` `)` `(` `11,672` `)` `(` `873,999` `)` `$ 1,366,407` `$ 1,779,411` `642,278` `-` `642,278` `(` `93,344` `)` `(` `25,475` `)` `(` `779,513` `)` `$ 1,523,357`		`($` `41,795 )` `-` `7,394` `7,394` `-` `-` `-` `($` `34,401 )` `($` `67,270 )` `-` `(` `18,374 )` `(` `18,374 )` `-` `-` `-` `($` `85,644 )`	`$ 5,348,469` `520,433` `7,394` `527,827` `-` `-` `(` `873,999` `)` `$ 5,002,297` `$ 5,382,432` `642,278` `(` `18,374` `)` `623,904` `-` `-` `(` `779,513` `)` `$ 5,226,823`

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

SIX MONTHS ENDED JUNE 30, 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
Gain 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
Acquisition of 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
Acquisition of right-of-use assets
Decrease (increase) 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 Six months ended June 30
Notes
2020
2019
$
803,217 $
651,565
6(15)
54,711
56,858
6(15)
5,982
4,974
12(2)
4,238 (
14,950 )
(
4,313 ) (
4,459 )
601
-
6(14)
(
406 ) (
2,356 )
4,703
31,184
(
489,888 ) (
76,603 )
(
11,290 )
8,307
(
308,328 )
78,072
13,521
1,786
(
18,372 ) (
19,460 )
9,703
2,018
386,011
102,951
9,855 (
30,405 )
(
1,466 ) (
518 )
2,407
6,764
(
929 ) (
878 )
459,957
794,850
5,940
4,192
(
601 ) (
314 )
(
59,959 ) (
157,458 )
405,337
641,270
(
19,102 ) (
215,032 )
2,998 (
34 )
6(5)
(
13,797 ) (
15,708 )
6,094
8,142
(
4,431 ) (
6,714 )
- (
143 )
1,968 (
388 )
-
29
(
26,270 ) (
229,848 )
(
13,526 ) (
11,101 )
(
13,526 ) (
11,101 )
(
17,184 )
7,204
348,357
407,525
1,300,530
1,097,433
$
1,648,887 $
1,504,958

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 SIX MONTHS ENDED JUNE 30, 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 August 5, 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 Amendments to IFRS 3, ‘Definition of a business’ Amendments to IFRS 9, IAS 39 and IFRS 7, ‘Interest rate benchmark Amendments to IFRS 16, ‘Covid-19-related rent concessions’	January 1, 2020 January 1, 2020 January 1, 2020 June 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.

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(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 endorsed by the FSC are as follows:

==> picture [479 x 66] intentionally omitted <==

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Effective date by
International
Accounting
New Standards, Interpretations and Amendments Standards Board
----- End of picture text -----

New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IFRS 3, ‘Reference to the conceptual framework’	January 1, 2022
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, 2023
Amendments to IFRS 17, ‘Insurance contracts’	January 1, 2023
Amendments to IAS 1, ‘Classification of liabilities as current or non-	January 1, 2023
current’
Amendments to IAS 16, ‘Property, plant and equipment: proceeds before	January 1, 2022
intended use’
Amendments to IAS 37, ‘Onerous contracts-cost of fulfilling a contract’	January 1, 2022
Annual improvements to IFRS Standards 2018–2020	January 1, 2022

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.

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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:

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	Name of subsidiary	Main business activities	% of Ownership	% of Ownership	Description
			June 30, 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)	DOLI TRADING LIMITED (DOLI) TEST RESEARCH USA INC. (TRU) TRI TEST RESEARCH EUROPE GMBH (TRE) TRI JAPAN CORPORATION (TRJ) TRI MALAYSIA SND. BHD (TRM) TRI KOREA CO., LTD. (TRK) TRI INVESTMENTS LIMITED (TIL) TRI Electronic (Shenzhen) Limited (TRI (SHENZHEN)) TRI Electronic (Shanghai) Limited (TRI (SHANGHAI)) TRI Electronic (Suzhou) Limited (TRI (SUZHOU))	Trading Trading Trading Trading Trading Trading Investment holdings 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	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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Name of investor	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 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 Name of subsidiary Main business activities TRI Electronic (Suzhou) Limited (TRI (SUZHOU))	% of Ownership	Description
		June 30, 2019
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	- - - - - - - - -

Except for the financial statements of DOLI as of and for the six months ended June 30, 2019 which were reviewed by the Company’s independent auditors, the financial statements of the abovementioned subsidiaries included in the Group’s consolidated financial statements for the six months ended June 30, 2020 and 2019 were not reviewed by independent auditors 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 interim period, and the related information is disclosed accordingly.

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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

Under 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. Also, the related information is disclosed accordingly.

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:

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 June 30, 2020, the carrying amount of inventories was $1,010,915.

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	June 30,2020 1,337 $ 1,387,592 - 259,958 1,648,887 $	December 31,2019 1,202 $ 996,972 122,356 180,000 1,300,530 $	June 30,2019
			997 $ 721,532 122,457 659,972
			1,504,958 $

~13~

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: June 30, 2020 December 31, 2019 June 30, 2019 Time deposits maturing over three months $ 223,879 $ 204,777 $ 215,032

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

(3) Notes and accounts receivable

		June 30, 2020	December	31,2019		June 30,2019
Notes receivable	$	20,640	$	25,343	$	27,885
Accounts receivable	$	2,431,519	$	1,941,765	$	2,172,090
Less: Allowance for
uncollectible
accounts	(	11,361)	(	7,257)	(	13,049)
	$	2,420,158	$	1,934,508	$	2,159,041

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 2,098,394 $ 20,640 $ 215,390 - 60,427 - 46,829 - 2,472 - 8,007 - 2,431,519 $ 20,640 $ June 30,2020	December	Notes receivable 25,343 $ - - - - - 25,343 $ 31,2019	June 30, 2019	June 30, 2019
	Accounts receivable 2,098,394 $ 215,390 60,427 46,829 2,472 8,007 2,431,519 $	Accounts receivable 1,742,504 $ 132,048 17,213 34,628 7,576 7,796 1,941,765 $		Accounts receivable 1,820,624 $ 250,696 29,486 37,477 17,847 15,960 2,172,090 $	Notes receivable 27,885 $ - - - - -
					27,885 $

The above ageing analysis was based on past due date.

B. As of June 30, 2020, December 31, 2019 and June 30, 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 June 30, 2020, December 31, 2019 and June 30, 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 $20,640, $25,343 and $27,885, and accounts receivable were $2,420,158, $1,934,508 and $2,159,041, respectively.

~14~

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

(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 935,278 $ 111,630) ($ 169,147 359) ( 4,575 14) ( 17,152 3,234) ( 1,126,152 $ 115,237) ($ Allowance for Cost valuation loss 753,534 $ 97,696) ($ 63,829 108) ( 4,146 - 18,152 3,424) ( 839,661 $ 101,228) ($ Allowance for Cost valuation loss 744,834 $ 88,633) ($ 132,744 126) ( 8,786 284) ( 16,987 3,541) ( 903,351 $ 92,584) ($ June 30,2020 December 31,2019 June 30,2019	Book value
		823,648 $ 168,788 4,561 13,918
		1,010,915 $
		Book value
		655,838 $ 63,721 4,146 14,728 738,433 $
		Book value
		656,201 $ 132,618 8,502 13,446
		810,767 $

The cost of inventories recognised as expense for the year:

Cost of goods sold Loss on slow-moving inventories Cost of goods sold Loss on obsolete inventory	Three months ended June 30	Three months ended June 30
	2020 2019 645,582 $ 513,877 $ 8,428 1,461 654,010 $ 515,338 $ Six months ended June 30	2019
		513,877 $ 1,461
		515,338 $
	2020 1,150,645 $ 14,700 1,165,345 $	2019
		917,489 $ 6,640
		924,129 $

~15~

(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 June 30 At June 30 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 $ - - - 9,053) ( - 680,893 $ 921,538 $ 240,645) ( 680,893 $	372,789 $ 226,871) ( 145,918 $ 145,918 $ 4,835 23,495 5,146) ( 10,556) ( 5,628) ( 152,918 $ 390,916 $ 237,998) ( 152,918 $	5,789 $ 3,643) ( 2,146 $ 2,146 $ 1,307 - 103) ( 248) ( 58) ( 3,044 $ 5,889 $ 2,845) ( 3,044 $	229,006 $ 141,942) ( 87,064 $ 87,064 $ 4,809 8,787 263) ( 14,682) ( 52) ( 85,663 $ 234,809 $ 149,146) ( 85,663 $

~16~

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 June 30 At June 30 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 $ - - - 9,053) ( - 698,997 $ 921,538 $ 222,541) ( 698,997 $	396,905 $ 244,108) ( 152,797 $ 152,797 $ 5,581 10,602 5,083) ( 14,338) ( 2,145 151,704 $ 403,099 $ 251,395) ( 151,704 $	5,810 $ 3,764) ( 2,046 $ 2,046 $ 944 - 77) ( 359) ( 18 2,572 $ 6,051 $ 3,479) ( 2,572 $	226,481 $ 131,781) ( 94,700 $ 94,700 $ 2,033 10,098 504) ( 15,039) ( 278 91,566 $ 222,283 $ 130,717) ( 91,566 $

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.

~17~

`－` (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 Buildings	June 30,2020 Carryingamount 54,308 $	December 31,2019 June 30,2019 Carryingamount Carryingamount 61,824 $ 33,213 $ Three months ended June 30	June 30,2019
			Carryingamount
			33,213 $
		2020 2019 Depreciation charge Depreciation charge 6,405 $ 5,617 $ 2020 2019 Depreciation charge Depreciation charge 12,722 $ 11,101 $ Six months ended June 30	2019
			Depreciation charge
			5,617 $
			Depreciation charge
			11,101 $

D. For the six months ended June 30, 2020 and 2019, the additions to right-of-use assets were $6,129 and $143, respectively.
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 Items affecting profit or loss Interest expense on lease liabilities Expense on short-term lease contracts	Three months ended June 30	Three months ended June 30
	2020 2019 263 $ 159 $ 773 $ 3,089 $ Six months ended June 30	2019
		159 $
		3,089 $
	2020 601 $ 2,969 $	2019
		314 $
		6,216 $

F. For the three months and six months ended June 30, 2020 and 2019, the Group’s total cash outflow for leases were $7,512, $12,134, $17,096 and $17,774, respectively.

~18~

(7) Other payables

June 30,2020 Dividends payable 779,513 $ Salaries and bonus payable 169,092 Employees’ compensation and directors’remuneration payable 47,036 Others 70,020 1,065,661 $	December 31,2019 June 30,2019 - $ 873,999 $ 171,933 116,476 27,862 79,566 76,820 81,891 276,615 $ 1,151,932 $

(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 $110, $133, $221 and $266 for the three months and six months ended June 30, 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 $2,300.

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.

~19~

(b) Other overseas entities contribute to the statutory pension insurance or pension fund for their employees based on their wages and salaries in compliance with local laws and regulations. Other than the annual contributions, the entities have no further obligations.
(c) The pension costs under the defined contribution pension plans of the Group for the three months and six months ended June 30, 2020 and 2019 were $6,496, $6,022, $12,892 and $12,023, respectively.

(9) Share capital

The Company’s authorised capital was $2,500,000. As of June 30, 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 and 2018 earnings had been resolved at the shareholders’ meeting on May 27, 2020 and May 29, 2019, respectively. Details are summarized below:

Year ended December 31	Year ended December 31	Year ended December 31
Dividends per Amount share(in dollars) 93,344 $ 25,475 $ 779,513 $ 3.3 $ 2019	2018
Amount 93,344 $ 25,475 $ 779,513 $	Amount 106,439 $ 11,672 $ 873,999 $	Dividends per share(in dollars)
		3.7 $

~20~

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 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 Revenue from contracts with customers	Three months ended June 30	Three months ended June 30
	2020 2019 1,487,104 $ 1,219,732 $ Six months ended June 30	2019
		1,219,732 $
	2020 2,649,605 $	2019
		2,196,091 $

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 June 30	Three months ended June 30
	2020 1,391,525 $ 25,280 67,535 2,764 1,487,104 $	2019
		1,035,871 $ 53,008 121,296 9,557
		1,219,732 $

~21~

Asia America Europe Others	2020 2019 2,467,799 $ 1,891,302 $ 46,246 85,957 125,815 205,943 9,745 12,889 2,649,605 $ 2,196,091 $ Six months ended June 30

B. Contract liabilities

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

==> picture [479 x 27] intentionally omitted <==

For the three months and six months ended June 30, 2020 and 2019, the Group’s contract liabilities on January 1, 2020 and 2019 were realised to revenue amounting to $830, $3,256, $48,644 and $34,247, respectively.

(13) Other income

Rental income Other income Rental income Other income	Three months ended June 30	Three months ended June 30
	2020 2019 3,255 $ - $ 629 13,554 3,884 $ 13,554 $ Six months ended June 30	2019
		- $ 13,554
		13,554 $
	2020 4,752 $ 5,087 9,839 $	2019
		- $ 24,614
		24,614 $

(14) Other gains and losses

Three months ended March 31


Gains on disposal of property, plant and
equipment	$	606	$	3,053
Net currency exchange (losses) gains	(	36,797)		98
Other losses	(	1)	(	13,010)
	($	36,192)	($	9,859)

~22~

Gains on disposal of property, plant and equipment Net currency exchange (losses) gains Other losses

==> picture [230 x 103] intentionally omitted <==

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

Six months ended June 30
2020 2019
$ 406 $ 2,356
( 29,408) 23,074
( 2) ( 23,277)
($ 29,004) $ 2,153
----- End of picture text -----

(15) Expenses by nature

Employee benefit expense Depreciation charges on property, plant and equipment and right-of-use assets Amortisation charges on intangible assets

Employee benefit expense

Depreciation charges on property, plant and equipment and right-of-use assets Amortisation charges on intangible assets

==> picture [223 x 222] intentionally omitted <==

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

Three months ended June 30
2020 2019
$ 265,517 $ 230,426
28,301 28,959
3,022 2,590
$ 296,840 $ 261,975
Six months ended June 30
2020 2019
$ 496,497 $ 446,864
54,711 56,858
5,982 4,974
$ 557,190 $ 508,696
----- End of picture text -----

(16) Employee benefit expense

Wages and salaries Labour and health insurance fees Pension costs Other personnel expenses Wages and salaries Labour and health insurance fees Pension costs Other personnel expenses	Three months ended June 30	Three months ended June 30
	2020 2019 239,810 $ 200,402 $ 10,782 15,983 6,606 6,155 8,319 7,886 265,517 $ 230,426 $ Six months ended June 30	2019
		200,402 $ 15,983 6,155 7,886
		230,426 $
	2020 438,214 $ 27,769 13,113 17,401 496,497 $	2019
		383,589 $ 34,015 12,289 16,971
		446,864 $

~23~

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.
B. For the three months and six months ended June 30, 2020 and 2019, employees’ compensation was accrued at $7,443, $5,491, $12,655 and $10,116, respectively; while directors’ remuneration was accrued at $3,834, $2,829, $6,519 and $5,212, 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 six months ended June 30, 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:

Current tax: Current tax on profit for the period Tax on undistributed earnings Total current tax Deferred tax: Origination and reversal of temporary differences Total deferred tax Income tax expense	Three months ended June 30	Three months ended June 30
	2020 85,843 $ 2,018 87,861 9,704 9,704 97,565 $	2019
		60,787 $ 3,386
		64,173
		4,076
		4,076
		68,249 $

~24~

Current tax: Current tax on profit for the period Tax on undistributed earnings Total current tax Deferred tax: Origination and reversal of temporary differences Total deferred tax Income tax expense	2020 2019 145,534 $ 105,778 $ 2,018 3,386 147,552 109,164 13,387 21,968 13,387 21,968 160,939 $ 131,132 $ Six months ended June 30

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

		Three months	ended June 30	ended June 30
		2020		2019
Currency translation differences	($	2,666)	($	1,778)

		Six months ended June 30
		2020		2019
Currency translation differences	($	4,594)	$	1,849

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

(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	Weighted average number of ordinary shares outstanding (shares in Earnings per share Amount after tax thousands) (in dollars) 372,127 $ 236,216 1.58 $ - 137 372,127 $ 236,353 1.57 $ Three months ended June 30,2020
	Amount after tax 372,127 $ - 372,127 $

~25~

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) 282,035 $ 236,216 1.19 $ - 112 282,035 $ 236,328 1.19 $ Weighted average number of ordinary shares outstanding (shares in Earnings per share Amount after tax thousands) (in dollars) 642,278 $ 236,216 2.72 $ - 344 642,278 $ 236,560 2.72 $ Three months ended June 30,2019 Six months ended June 30,2020
	Amount after tax 642,278 $ - 642,278 $

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)
282,035
$ 236,216
1.19
$ -
112
282,035
$ 236,328
1.19
$ Weighted average
number of
ordinary shares
outstanding
(shares in
Earnings per share
Amount after tax
thousands)
(in dollars)
642,278
$ 236,216
2.72
$ -
344
642,278
$ 236,560
2.72
$ Three months ended June 30,2019
Six months ended June 30,2020

Amount after tax
642,278
$ -
642,278
$

~26~

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

Six months ended June 30, 2019
Weighted average
number of
ordinary shares
outstanding
(shares in Earnings per share
Amount after tax thousands) (in dollars)
Basic earnings per share
Profit attributable to ordinary
shareholders of the parent $ 520,433 236,216 $ 2.20
Diluted earnings per share
Assumed conversion of all dilutive
potential ordinary shares
Employees’ compensation - 542
Profit attributable to ordinary
shareholders of the parent plus
assumed conversion of all dilutive
potential ordinary shares $ 520,433 236,758 $ 2.20
----- End of picture text -----

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

(19) Supplemental cash flow information

Financing activities with no cash flow effects:

Cash dividends declared but not yet to be paid	Six months endedJune30	Six months endedJune30
	2020 779,513 $	2019
		873,999 $

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.

~27~

(2) Key management compensation

Salaries and other short-term employee benefits Post-employment benefits Salaries and other short-term employee benefits Post-employment benefits	2020 2019 12,357 $ 7,708 $ 195 119 12,552 $ 7,827 $ 2020 2019 21,877 $ 15,058 $ 388 237 22,265 $ 15,295 $ Three months ended June 30 Six months ended June 30

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	June 30,2019 Purpose 388,990 $ Security for lines of credit 52,931 " 3,106 Performance bond 445,027 $	Purpose
		June 30,2020 388,990 $ 51,338 - 440,328 $	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.

~28~

(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

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)	June 30,2020 1,648,887 $ 223,879 20,640 2,420,158 30,679 9,623 - 4,353,866 $ 36,101 $ 841,757 1,065,661 1,943,519 $ 53,523 $	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 $	June 30,2019
			1,504,958 $ 215,032 27,885 2,159,041 19,140 9,182 3,106
			3,938,344 $
			28,916 $ 484,083 1,151,932
			1,664,931 $
			33,070 $

~29~

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)

~30~

		June 30,2020	June 30,2020	June 30,2020
Foreign currency amount (in thousands) 56,019 $ 80,224 74,975 1,551 721 54,633 2,368 416,658 175,760 1,906 $ 17,780 130,136	Exchange rate 29.63 4.19 0.28 29.63 33.27 0.28 6.62 0.02 4.19 29.63 4.19 0.28	Book value (NTD) 1,659,843 $ 336,219 20,626 45,951 23,989 15,029 15,676 10,375 736,612 56,475 $ 74,516 35,800	SensitivityAnalysis
			Degree of variation 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%	Effect on profit of loss 16,598 $ 3,362 206 - - - - - - 565 $ 745 358	Effect on other comprehensive income
					- $ - - 460 240 150 157 104 7,366 - $ - -

~31~

		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% 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 - $ - -

~32~

		June 30,2019	June 30,2019	June 30,2019
Foreign currency amount (in thousands) 22,552 $ 409,714 316 36,385 1,373 856 32,366 1,987 172,104 3,361 $ 244,208 341 60,550	Exchange rate 31.06 4.52 35.38 0.29 31.06 35.38 0.29 7.20 4.52 31.06 4.52 35.38 0.29	Book value (NTD) 700,465 $ 1,852,317 11,180 10,501 42,659 30,300 9,485 14,341 778,082 104,393 $ 1,104,064 12,065 17,475	SensitivityAnalysis
			Degree of variation 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%	Effect on profit of loss 7,005 $ 18,523 112 105 - - - - - 1,044 $ 11,041 121 175	Effect on other comprehensive income
					- $ - - - 427 303 95 143 7,781 - $ - - -

~33~

iii. Total exchange (loss) gain, including realised and unrealised arising from significant foreign exchange variation on the monetary items held by the Group for the three months and six months ended June 30, 2020 and 2019 amounted to ($36,797), $98, ($29,408) and $23,074, 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.

~34~

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 June 30, 2020, December 31, 2019 and June 30, 2019, the provision matrix based on the 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 June 30, 2019 June 30, 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 past due past due past due past due past due 0.26% 1.5% 15% 25% 40% 325,211 $ 114,283 $ 12,199 $ 153 $ 808 $ 856 1,714 1,830 38 323 Not 1~60 days 61~90 days 91~180 days 181~365 days past due past due past due past due past due 0.03%-0.19% 1.5% 15% 25% 40% 419,864 $ 19 $ - $ 1,132 $ 5,767 $ 812 - - 283 2,307 Not 1~60 days 61~90 days 91~180 days 181~365 days past due past due past due past due past due 0.18% 1.5% 15% 25% 40% 603,016 $ 85,634 $ 2,224 $ 8,589 $ - $ 1,114 1,284 334 2,147 - June 30,2020 December 31, 2019 0.03%-0.26% 0.03%-0.19% 1,977,192 $ 1,513,693 $ $ 5,161 2,937	91~180 days past due	181~365 days past due		Over 365 days past due Total 60%-100% 1,673 $ 454,327 $ 1,439 6,200 Over 365 days past due Total 60%-100% 1,290 $ 428,072 $ 918 4,320 Over 365 days past due Total 60%-100% 9,127 $ 708,590 $ 5,477 10,356 June 30,2019 0.18% 1,463,500 2,693	Total
		25% 153 $ 38 91~180 days past due	40% 808 $ 323 181~365 days past due			454,327 $ 6,200 Total
		25% 1,132 $ 283 91~180 days past due	40% 5,767 $ 2,307 181~365 days past due			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%, which was used to assess the default possibility of accounts receivable.

~35~

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		4,238		-
Reversal of impairment loss		-	(	14,950)
Effect of exchange rate changes	(	134)		116
At June 30	$	11,361	$	13,049

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.

June 30, 2020 Notes payable Accounts payable Other payables Lease liabilities December 31, 2019 Notes payable Accounts payable Other payables Lease liabilities June 30, 2019 Notes payable Accounts payable Other payables Lease liabilities Non-derivative financial liabilities: Non-derivative financial liabilities:	Less than 1 year $ 36,101 841,757 1,065,661 25,958 Less than 1 year $ 26,398 455,746 276,615 23,594 Less than 1year $ 28,916 484,083 1,151,932 16,010	Over 1year
		$ - - - 33,139 Over 1year
		$ - - - 44,892 Over 1year
		$ - - - 17,060

~36~

(3) Fair value information

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

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: Please refer to table 2.
H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 3.
I. Trading in derivative instruments undertaken during the reporting periods: None.
J. Significant inter-company transactions during the reporting periods: Please refer to table 4.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 5.

(3) Information on investments in Mainland China

A. Basic information: Please refer to table 6.
B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: Please refer to Table 3 to 5.

~37~

(4) Major shareholders information

Major shareholders information: Please refer to Table 7.

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	Six months ended June 30	Six months ended June 30
	2020 2,649,605 $ 818,670 $	2019
		2,196,091 $
		620,653 $

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:

		Six months ended June 30	Six months ended June 30
		2020	2019
Reportable segments income	$	818,670	$	620,653
Unallocated profit or loss:
Non-operating income and expenses	(	15,453)		30,912
Income before tax from continuing operations	$	803,217	$	651,565

~38~

Test Research, Inc. and Subsidiaries

Table 1

Loans to others

Six months ended June 30, 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 six months ended June 30, 2020	Balance at June 30, 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	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 $	25,146 $	25,146 $	4.75%	Short-term financing	- $	Additional operating capital	- $	None	- $	522,682 $	1,045,365 $	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 Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more Six months ended June 30, 2020

Table 2

Expressed in thousands of NTD (Except as otherwise indicated)

Purchaser/seller	Counterparty	Relationship with the counterparty		Transaction	Transaction		Differences in transaction terms compared to third partytransactions	Differences in transaction terms compared to third partytransactions	Notes/accounts receivable(payable)	Notes/accounts receivable(payable)	Footnote
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable(payable)
Test Research, Inc. Test Research, Inc. TRI Electronic (Shenzhen) Limited TRI Electronic (Suzhou) Limited	TRI Electronic (Shenzhen) Limited TRI Electronic (Suzhou) Limited Test Research, Inc. Test Research, Inc.	Second-tier subsidiary Second-tier subsidiary Parent company Parent company	Sales Sales Purchases Purchases	143,011 $ 166,305 143,011 166,305	0% 0% 100% 100%	90-120 days after acceptance and same with the third parties 90-120 days after acceptance and same with the third parties 90-120 days after acceptance and same with the third parties 90-120 days after acceptance and same with the third parties	40% to 60% of the standard price offered to third parties 40% to 60% of the standard price offered to third parties Determined by the parent company Determined by the parent company	90-120 days after acceptance and same with the third parties 90-120 days after acceptance and same with the third parties 90-120 days after acceptance 90-120 days after acceptance	70,603 229,361 (70,603) (229,361)	3% 10% 90% 99%	None None None None

Table 2 Page 1

Test Research, Inc. and Subsidiaries

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

Six months ended June 30, 2020

Table 3 Creditor	Counterparty	Relationship with the counterparty	Balance as at June 30,2020	Turnover rate	Overduereceivables	Overduereceivables	Expressed in thousands of NTD (Except as otherwise indicated) Amount collected subsequent to the balance sheet date (Note) Allowance for doubtfulaccounts	Expressed in thousands of NTD (Except as otherwise indicated) Amount collected subsequent to the balance sheet date (Note) Allowance for doubtfulaccounts
					Amount	Actiontaken
Test Research, Inc.	TRI Electronic (Suzhou) Limited	Second-tier subsidiary	229,361 $	2.15	66,825 $	In the process of collection	`10,371` `$`	- $

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

Table 3 Page 1

Test Research, Inc. and Subsidiaries

Significant inter-company transactions during the reporting period

Six months ended June 30, 2020

Table 4 Number (Note 1)	Companyname	Counterparty	Relationship (Note 2)		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) Transactions
				General ledger account	Amount(Note 4)	Transaction terms	Percentage of consolidated total operating revenues or total assets
0 0 0 0 0 0 0 0 1 1 2 3 4 5	Test Research, Inc. Test Research, Inc. Test Research, Inc. Test Research, Inc. Test Research, Inc. Test Research, Inc. Test Research, Inc. Test Research, Inc. TRI Electronic (Shenzhen) Limited TRI Electronic (Shenzhen) Limited TRI Electronic (Suzhou) Limited TRI Electronic (Shanghai) Limited TEST RESEARCH USA, INC. TRI TEST RESEARCH EUROPE GMBH	TRI Electronic (Suzhou) Limited TRI Electronic (Shenzhen) Limited TRI JAPAN CORPORATION TEST RESEARCH USA, INC. TRI Electronic (Suzhou) Limited TRI Electronic (Shenzhen) Limited TRI JAPAN CORPORATION TEST RESEARCH USA, INC. Test Research, Inc. Test Research, Inc. Test Research, Inc. TRI Electronic (Suzhou) Limited Test Research, Inc. Test Research, Inc.	1 1 1 1 1 1 1 1 2 2 2 3 2 2	Sales revenue Sales revenue Sales revenue Sales revenue Accounts receivable Accounts receivable Accounts receivable Accounts receivable Service revenue Accounts receivable Service revenue Other receivables Service revenue Service revenue	166,305 $ 143,011 22,737 11,942 229,361 70,893 19,657 11,805 67,366 29,521 17,069 25,146 13,717 10,217	Note 3 Note 3 Note 8 Note 8 Note 3 Note 3 Note 8 Note 8 Note 6 and 7 Note 6 and 7 Note 6 and 7 Note 5 Note 6 Note 6	6 5 1 - 3 1 - - 3 - 1 - 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: Selling prices to the parent company and the Mainland China investees are determined based on 40% to 60% of the standard sales price. The credit term is 90 to 120 days after acceptance and was the same with the 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: The price is determined based on the mutual agreement.

Table 4 Page 1

Test Research, Inc. and Subsidiaries

Information on investees Six months ended June 30, 2020

Table 5

Expressed in thousands of NTD (Except as otherwise indicated)

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held as atJune	Shares held as atJune	30,2020	Net profit (loss) of the investee for the six months ended June30,2020	Investment income (loss) recognised by the Company for the six months ended June 30, 2020	Footnote
				Balance as at June30,2020	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 South 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	692,981 $ 43,631 45,951 23,989 14,828 15,676 9,880	43,050 $ 6,538 100) ( 6,412) ( 84 787 418	43,050 $ 9,703 100) ( 6,412) ( 84 787 418	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 5 Page 1

Test Research, Inc. and Subsidiaries

Information on investments in Mainland China - Basic information

Six months ended June 30, 2020

Table 6


Table 6 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 six months ended June 30,2020		Accumulated amount of remittance from Taiwan to Mainland China as of June 30, 2020(Note 3)	Net income of investee for the six months ended June 30,2020	Ownership held by the Company (direct or indirect)	Investment income recognised by the Company for the six months ended June 30, 2020(Note 2(2)C.)	Footnote Book value of investments in Mainland China as of June 30, 2020(Note 5) Accumulated amount of investment income remitted back to Taiwan as of June 30,2020 Expressed in thousands of NTD (Except as otherwise indicated)
					Remitted to Mainland China	Remitted back to Taiwan
TRI Electronic (Shenzhen) Limited TRI Electronic (Suzhou) Limited TRI Electronic (Shanghai) Limited Companyname	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 Accumulated amount of remittance from Taiwan to Mainland China as of June 30, 2020 (Note 3)	$ 90,372 76,710 115,557 Investment amount approved by the Investment Commission of the Ministry of Economic Affairs (MOEA) (Note 3)	2 2 2 Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA(Note 4)	$ 22,223 59,260 115,557	$ - - -	$ - - -	$ 22,223 59,260 115,557	$ 38,188 6,405 ( 1,543)	100 100 100	$ 38,188 6,405 ( 1,543)	$ 539,882 82,221 68,116	$ - - -	Note 5 Note 5 Note 5
Test Research, Inc.	$ 197,040	$ 276,688	$ 3,136,094

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 six months ended June 30, 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 (1:29.63) 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 6 Page 1

Test Research, Inc. and Subsidiaries

Major shareholders information June 30, 2020

Table 7

Table 7
Name of major shareholders Shares	Number of shares held	Ownership (%)
Chieh-Yuan, Chen	37,889,235	16.04%
Mei-Hsing, Yeh	17,338,054	7.33%
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 7 Page 1

AI assistant

TRI — Interim / Quarterly Report 2020

52263_rns_2020-12-01_65e77eac-d151-4de9-99b2-fd8d921e83ab.pdf

TEST RESEARCH, INC. AND SUBSIDIARIES

INDEPENDENT AUDITORS' REVIEW REPORT TRANSLATED FROM CHINESE

Introduction

Scope of Review

Basis for Qualified Conclusion

Qualified Conclusion

TEST RESEARCH, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

JUNE 30, 2020, DECEMBER 31, 2019 AND JUNE 30, 2019

TEST RESEARCH, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS JUNE 30, 2020, DECEMBER 31, 2019 AND JUNE 30, 2019

TEST RESEARCH, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

SIX MONTHS ENDED JUNE 30, 2020 AND 2019

TEST RESEARCH, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY SIX MONTHS ENDED JUNE 30, 2020 AND 2019

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

SIX MONTHS ENDED JUNE 30, 2020 AND 2019

TEST RESEARCH, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS SIX MONTHS ENDED JUNE 30, 2020 AND 2019

1. HISTORY AND ORGANISATION

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

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Compliance statement

(2) Basis of preparation

(3) Basis of consolidation

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

(5) Income tax

(6) Employee benefits

Evaluation of inventories

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

(2) Financial assets at amortised cost

(3) Notes and accounts receivable

(4) Inventories

(5) Property, plant and equipment

－ (6) Leasing arrangements lessee

(7) Other payables

(8) Pensions

A. Defined benefit plan

B. Defined contribution plan

(9) Share capital

(10) Capital surplus

(11) Retained earnings

(12) Operating revenue

B. Contract liabilities

(13) Other income

(14) Other gains and losses

Three months ended March 31

(15) Expenses by nature

Employee benefit expense

(16) Employee benefit expense

(17) Income tax

(18) Earnings per share

(19) Supplemental cash flow information

7. RELATED PARTY TRANSACTIONS

(1) Parent and ultimate controlling party

(2) Key management compensation

8. PLEDGED ASSETS

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS

(1) Contingencies

(2) Commitments

10. SIGNIFICANT DISASTER LOSS

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

12. OTHERS

(1) Capital management

(2) Financial instruments

A. Financial instruments by category

Price risk

Cash flow and fair value interest rate risk

Group A:

c) Liquidity risk

(3) Fair value information

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

(2) Information on investees

(3) Information on investments in Mainland China

(4) Major shareholders information

TRI Interim / Quarterly Report 2020

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

`－` (6) Leasing arrangements lessee