Stock Code:1310

$\mathbf{1}$

TAIWAN STYRENE MONOMER CORPORATION

Parent Company Only Financial Statements

With Independent Auditors' Report for the Years Ended December 31, 2019 and 2018

Address: 8F.-1, No.6, Sec.1, Roosevelt Rd., Taipei City Telephone: $(02)2396-6007$

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

Contents	Page
1. Cover Page	1
2. Table of Contents	$\overline{2}$
3. Independent Auditors' Report	3
4. Balance Sheets	4
5. Statements of Comprehensive Income	5
6. Statements of Changes in Equity	6
7. Statements of Cash Flows	7
8. Notes to the Parent Company Only Financial Statements
Company history (1)	8
(2) Approval date and procedures of the financial statements	8
(3) New standards, amendments and interpretations adopted	$8 - 11$
(4) Summary of significant accounting policies	$11 - 26$
(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty	$26 - 27$
Explanation of significant accounts (6)	$27 - 54$
Related-party transactions (7)	$54 - 56$
(8) Pledged assets	57
(9) Commitments and contingencies	57
(10) Losses due to major disasters	57
(11) Subsequent events	57
$(12)$ Others	$57 - 58$
(13) Other disclosures items
(a) Information on significant transactions	$59 - 61$
(b) Information on investees	62
(c) Information on investment in mainland China	62
(14) Segment information	63
9. List of major account titles	$64 - 72$

要侯建業群合會計師事務府

KPMG 台北市11049信義路5段7號68樓(台北101大樓) 68F., TAIPEL 101 TOWER, No. 7 Sec. 5 Xinyi Road, Taipei City 11049, Taiwan (R.O.C.)

Telephone 電話 + 886 2 8101 6666 Fax 傳真 + 886 2 8101 6667 Internet 網址 kpmg.com/tw

Independent Auditors' Report

To the Board of Directors of Taiwan Styrene Monomer Corporation:

Opinion

We have audited the parent company only financial statements of Taiwan Styrene Monomer Corporation ("the Company"), which comprise the balance sheet as of December 31, 2019, and the statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, based on our audit and the reports of other auditors (please refer to Other Matter paragraph), the accompanying parent company only financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019, and its financial performance and its cash flows for the year then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audit in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China ("the Code"), and we have fulfilled our other ethical responsibilities in accordance with the Code. Based on our audit and the reports of other auditors, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the parent company only financial statements of the current period. These matters were addressed in the context of our audit of the parent company only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

Revenue recognition

Regarding accounting policies on revenue recognition, please refer to note 4(o) "Revenue recognition" to the parent company only financial statements.

Description of key audit matter:

The Company's sales revenue is recognized when a performance obligation is satisfied, which depends on the various trade terms agreed with customers. Therefore, the accuracy of revenue recognition is considered to be one of most significance in the audit.

How the matter was addressed in our audit:

Our principal audit procedures included assessing whether the accounting policies regarding to revenue recognition were inconformity with relevant accounting standards; obtaining understanding and testing the design and implement effectiveness of internal controls over revenue recognition; selecting samples and examining the transaction terms and vouchers; in addition, we also performed analytical procedures on primary customers and products to evaluate if there is any material abnormality.

Impairment assessment of investments accounted for using equity method

Refer to note $4(n)$ "Impairment of non-financial assets" and note 6 (h) " Investments accounted for using equity method" to the parent company only financial statements for details of accounting policies and relevant information about impairment assessment of investments accounted for using equity method".

Description of key audit matter:

The Company assesses impairment of investments accounted for using equity method in accordance with relevant accounting standards. Such assessment of impairment requires management to make judgments and assumptions, therefore, the assessment of impairment loss on investments accounted for using equity method is considered to be one of most significance in the audit.

How the matter was addressed in our audit:

Our principal audit procedures included obtaining understanding of the Company's internal controls over impairment loss assessment; evaluating the appropriateness of assumptions adopted by management when determining the recoverable amount based on an appraisal report issued by a third party; and assessing the qualification and independence of the Certified Business Valuator.

Other Matter

We did not audit the financial statements of some equity-accounted investees of the Company. Those statements, which were prepared using a different financial reporting framework, were audited by other auditors, whose reports have been furnished to us. We have performed audit procedures on the conversion adjustments to the financial statements of those investees, which conform to those financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers. Our opinion, insofar as it relates to the amounts included for those investees prior to the conversion adjustments, is based solely on the reports of other auditors. Investments accounted for using equity method on those investees constituting 13.22% of total assets at December 31, 2019, and the related share of profit of subsidiaries, associates and joint ventures accounted for using equity method constituting 10.87% of total profit before tax for the year then ended.

The parent company only financial statements of the Company as of and for the year ended December 31, 2018, were audited by another auditor, who expressed an unmodified opinion with other matters paragraph on March 11, 2019.

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

Management is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Securities and for such internal control as management determines is necessary to enable the preparation of parent company only financial statements that are free from material misstatement, whether due to fraud or error.

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

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

Auditor's Responsibilities for the Audit of the Parent Company Only Financial Statements

Our objectives are to obtain reasonable assurance about whether the parent company only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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

1. Identify and assess the risks of material misstatement of the parent company only financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
1. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
1. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
1. Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
1. Evaluate the overall presentation, structure and content of the parent company only financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
1. Obtain sufficient appropriate audit evidence regarding the financial information of the investment in other entities accounted for using the equity method to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company only financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors' report are Lin Wu and Yuan-Sheng Yin.

KPMG

Taipei, Taiwan (Republic of China) March 11, 2020

Notes to Readers

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

(English Translation of Financial Statements Originally Issued in Chinese)
TAIWAN STYRENE MONOMER CORPORATION

Balance Sheets

December 31, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars)

		December 31, 2019	December 31, 2018				December 31, 2019	December 31, 2018
	Assets	ž, Amount	Amount	℅		Liabilities and Equity	҉ Amount	ž, Amount
	Current assets:					Current liabilities:
1100	Cash and cash equivalents (note 6(a))	1,211,902 S	1,605,546 $\overline{4}$	$\frac{6}{2}$	2130	Current contract liabilities (note 6(v))	7,829	97,508
$\frac{1}{2}$	Current financial assets at fair value through profit or loss (note 6(b))	39,100	103,820		2170	Accounts payable	≌ 1,089,348	1,204,490
1170	Accounts receivable, net (note 6(c))	816,032	900,261 $\mathbf{r}$		2200	Other payables (notes 6(o) and 7)	173,161	272,002
1200	Other receivables (note 7)	964	47,947		2230	Current tax liabilities	66,621	238,236
130X	$In$ ventories (note $6(d)$ )	427,565	641,276 и		2280	Current lease liabilities (note 6(q))	4,851
1410	Prepayments (note 6(e))	120,334	86,182		2320	Long-term liabilities, current portion (notes 6(p) and 8)		88,880
1460	Non-current assets (or disposal groups) held for sale, net				2399	Other current liabilities (note 7)	2,025	3,509
	(note(0))	41,119		۰.		Total current liabilities	$\tilde{=}$ 1.343,835	$\frac{19}{1}$ ,904,625
	Total current assets	$\frac{50}{2}$ 2,657,016	3,385,032	$\overline{35}$		Non-Current liabilities:
	Non-current assets:				2540	Long-term borrowings (notes 6(p) and 8)		111,100
1517	Non-current financial assets at fair value through other comprehensive				2570	Deferred tax liabilities (note 6(s))	N 174,654	Z 173,509
	income (notes $6(g)$ and 7)	396,161	181,577	2	2580	Non-current lease liabilities (note 6(q))	8,173
1550	Investments accounted for using equity method (notes $6(h)$ , (i), (j) and 7)	2,757,918	3,430,836 32	35	2640	Net defined benefit liabilities, non-current (note 6(r))	64.445	74,126
1600	Property, plant and equipment (notes 6(k), 7 arid 8)	2,693,666	2,667,126 32	27	2650	Credit balance of investments accounted for using equity method (note 6(h))		7,863
1755	Right-of-use assets (note 6(l)	13,345				Total non-current liabilities	247,272	366,598
1780	Intangible assets (note 6(m))	12,098		9,266		Total liabilities	ቧ 1,591,107	ମ୍ବ 2,271,223
1840	Deferred tax assets (note 6(s))	21,728		18,560		Equity: (note 6(t))
1920	Refundable deposits	3,873		3,962	3100	Capital stock	5 5,278,698	द्र 5,278,698
1990	Other non-current assets, others (note 6(n))	57,354	38.183		3200	Capital surplus	42,418	60,415
	Total non-current assets	5.956,143	6,349,510 $\tilde{\varepsilon}$	65		Retained earnings:
					3310	Legal reserve	ی 531,249	409,609
					3320	Special reserve	430,668	8,811
					3350	Unappropriated retained earnings	$\overline{15}$ .320,268	ଧ୍ୟ 2,127,643
							26 2,282,185	$\frac{26}{5}$ 2,546,063
					3400	Other equity	$\circledcirc$ (581,249)	E (421.857)
						Total equity	$\overline{\mathbf{z}}$ 7,022,052	듸 7,463,319

	Total assets	$\frac{100}{20}$ 8,613,159	9,734,542	휇		Total liabilities and equity	gl 8,613,159	휇 9,734,542

$\overline{\phantom{a}}$

(English Translation of Financial Statements Originally Issued in Chinese)
TAIWAN STYRENE MONOMER CORPORATION

Statements of Comprehensive Income

For the years ended December 31, 2019 and 2018

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

		2019	2018
		$\%$ Amount	% Amount
4000	Operating revenue (note $6(v)$ )	11,717,894 100 S.	14,806,544 100
5000	Operating costs (notes 6(d), (k), (l), (m), (q), (r), (x))	10,368,845 88	12,829,579 87
	Gross profit from operations	1.349.049 12	1,976,965 13
	Operating expenses (notes 6(c), (k), (l), (m), (q), (r), (x) and 7):
6100	Selling expenses	50,514	52,089
6200	Administrative expenses	141,150 Ĩ.	185,250 $\overline{2}$
6300	Research and development expenses	19,700	43,865
6450	Expected credit impairment loss (profit)	(4)	45
		211,360	281,249 $\overline{2}$
	Operating income	1,137,689 11	1,695,716 11
	Non-operating income and expenses (notes 6(g), (h), (q), (w) and 7):
7010	Other income	22,339	22,274
7020	Other gains and losses	856	(69, 513)
7050	Finance costs	(977) ٠	(7,508)
7070	Share of profit of subsidiaries, associates and joint ventures accounted for using equity method	(130.851) (1)	(72, 198)
		(1) (108.633)	(126.945)
9900	Profit before tax	1,029,056 10	1,568,771 11
7950	Less: Income tax expenses (note $6(s)$ )	146,991	352,370 $\overline{\mathbf{c}}$
	Net income	9 882,065	9 1,216,401
8300	Other comprehensive income (loss):
83i0	Components of other comprehensive income (loss) that will not be reclassified to profit or loss
8311	Gains on remeasurements of defined benefit plans	11,167	20,931
8316	Unrealized losses from investments in equity instruments measured at fair value through other comprehensive income	(7, 872) ä,	(5,050)
8330	Share of other comprehensive income of subsidiaries, associates and joint ventures accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss	(135, 722) (1)	(193.922) (2)
8349	Less: Income tax related to components of other comprehensive income that will not be reclassified to profit or loss	2.233	3,249
	Components of other comprehensive income (loss) that will not be reclassified to profit or loss	(134, 660) (1)	(181, 290) (2)
8360	Components of other comprehensive income (loss) that will be reclassified to profit or loss
8361	Exchange differences on translation	(602)	1.453
8380	Share of other comprehensive income of subsidiaries, associates and joint ventures accounted for using equity method. components of other comprehensive income that will be reclassified to profit or loss	(7,071)	3
8399	Less: Income tax related to components of other comprehensive income that will be reclassified to profit or loss
	Components of other comprehensive income (loss) that will be reclassified to profit or loss	(7,673) $\bullet$	1,456 $\sim$
8300	Other comprehensive income	(142, 333) (1)	(179, 834) (2)
8500	Comprehensive income	8 739,732	1,036,567 7
	Earnings per share (note $6(u)$ )
	Basic earnings per share	1.67	2.30
	Diluted earnings per share	1.67	2.30

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese)
TAIWAN STYRENE MONOMER CORPORATION

Statements of Changes in Equity

For the years ended December 31, 2019 and 2018 (Expressed in Thousands of New Taiwan Dollars)

								Other equity interest
							differences on Exchange	Unrealized gains measured at fair financial assets (losses) on	Unrealized
					Unappropriated Retained earnings		translation of foreign	value through other	on available- gains (losses)
	Common stock	Capital surplus	reserve Legal	Special reserve	earnings retained	Total	statements financial	comprehensive income	financial assets for-sale	Total
Balance at January 1, 2018	5,278,698 ÷Ą	68.142	307,466	157,923	1,378,191	1,843,580	(3,754)		101,265	97,511	$\frac{Total equity}{7,287,931}$
Effects of retrospective application					281,392	281.392		(190, 286)	(101, 265)	(291.551)	(10, 159)
Equity at beginning of period after adjustments	5,278,698	68,142	307,466	157,923	,659,583	2,124,972	(3,754)	(190, 280)		(194.040)	7,277,772
Net income					1,216,401	1,216,401					1,216,401
Other comprehensive income					17,647	17,647	1,456	(198, 937)		(197, 481)	(179, 834)
Total comprehensive income					1,234,048	1,234,048	1,456	(198, 937)		(197, 481)	1,036,567
Appropriation and distribution of retained earnings:
Legal reserve appropriated			102, 143		(102, 143)
Cash dividends of ordinary share					(844, 592)	(844, 592)					(844, 592)
Reversal of special reserve				(149, 112)	149, 112
Changes in equity of associates and joint ventures
accounted for using equity method		$(1,073)$ $(6,654)$			1,272	1,272					199
Difference between consideration and carrying amount of subsidiaries acquired or disposed of											(6, 654)
Disposal of investments in equity instruments					30,336	30,336		(30,336)		(30,336)
measured at fair value through other comprehensive
income
Other					$\overline{27}$	27
Balance at December 31, 2018	5,278,698	60,415	409,609	8,811	2,127,643	2,546,063	(2, 298)	(419, 559)		(421, 857)	7,463,319
Net income					882,065	882,065					882,065
Other comprehensive income					9.341	9,341	(7,673)	(144,001)		(151, 674)	(142, 333)
Total comprehensive income					891,406	891,406	(7,673)	(144,001)		(151, 674)	739,732
Appropriation and distribution of retained earnings:
Logal reserve appropriated			121,640		(121, 640)
Special reserve appropriated				421,857	(421, 857)
Cash dividends of ordinary share					(1,055,740)	(1,055,740)					$(1,055,740)$ $(29,861)$
Changes in equity of associates and joint ventures		,566)			(28, 295)	(28, 295)
accounted for using equity method
Disposal of investments accounted for using equity					(27,278)	(27,278)		27,278		27,278
method
measured at fair value through other comprehensive Disposal of investments in equity instruments
income					47,164	47,164		(47, 164)		(47, 164)
Changes in ownership interests in subsidiaries		(23, 561)					(819)			(819)	(24,380)
Changes in ownership interests in investments
accounted for using equity method		$\frac{130}{2}$			(91, 135)	(91, 135)	(123)	13,110		12,987	(71,018)
Balance at December 31, 2019	5,278,698	42,418	531.249	430,668	1,320,268	2,282,185	(10,913)	(570, 336)		(581,249)	7,022,052

(English Translation of Financial Statements Originally Issued in Chinese)
TAIWAN STYRENE MONOMER CORPORATION

Statements of Cash Flows

For the years ended December 31, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars)

	2019	2018
Cash flows from operating activities:
Profit before tax	\$ 1,029,056	1,568,771
Adjustments: Adjustments to reconcile profit (loss)
Depreciation expense	210,539	193,468
Amortization expense	2,198	57,990
Expected credit impairment loss (gain)	(4)	45
Net loss on financial assets at fair value through profit or loss		49,084
Interest expense	977	7,508
Interest income Dividend income	(7,076)	(4,168)
Share of loss of subsidiaries, associates and joint ventures accounted for using equity method	(2,791) 130,851	(7, 881)
Loss on disposal of property, plant and equipment	26,999	72,198 $\overline{\phantom{a}}$
Gain on disposal of non-current assets as held for sale	(3,057)
Loss (gain) on disposal of investments accounted for using equity method	(3,624)	21,204
Impairment loss on non-financial assets	144	522
Gain on lease modification Gain on reversal of impairment loss on investments accounted for using equity method	(167)
Total adjustments to reconcile profit (loss)	(8,766) 346,223	(19, 834) 370,136
Changes in operating assets and liabilities:
Changes in operating assets:
Financial assets mandatorily measured at fair value through profit or loss	64,720	(68, 179)
Accounts receivable	84,233	340,558
Other receivables Inventories	46,901	(28, 897)
Prepayments	213,711 (34, 296)	(56, 183) 605,461
Total changes in operating assets	375,269	792,760
Changes in operating liabilities:
Contract liabilities	(89, 679)	97,508
Notes payable Accounts payable		(5,835)
Other payables	(115, 142)	99,757
Advance receipts	(98, 553)	66,508 (7, 830)
Other current liabilities	(1,484)	(243)
Net defined benefit liabilities	1,486	2,137
Total changes in operating liabilities	(303, 372)	252,002
Total changes in operating assets and liabilities	71,897	1,044,762
Cash inflow generated from operations Interest received	1,447,176 7,158	2,983,669 3,900
Dividends received	2,791
Interest paid	(1,093)	(7,906)
Dividends paid	(172)	(162)
Income taxes paid	(322, 862)	(304, 177)
Net cash flows from operating activities Cash flows from investing activities:	1,132,998	2,675,324
Acquisition of financial assets at fair value through other comprehensive income		(71, 690)
Proceeds from disposal of financial assets at fair value through other comprehensive income	2,493
Proceeds from capital reduction of financial assets at fair value through other comprehensive income	3,475	6,273
Acquisition of investments accounted for using equity method Proceeds from disposal of investments accounted for using equity method	(98, 664)
Acquisition of property, plant and equipment	110,118 (254,791)	۳
Proceeds from disposal of property, plant and equipment	3,301	(127, 191)
Decrease in refundable deposits	15	10,000
Increase in other receivables from related parties		(9, 492)
Acquisition of intangible assets	(5,030)
Increase in other non-current assets Increase in prepayments for equipment	(20, 598)	(5, 554)
Net cash flows used in investing activities	(158) (259, 839)	(9, 283) (206, 937)
Cash flows from financing activities:
Repayments of long-term borrowings	(199, 980)	(461, 956)
Payment of lease liabilities	(11,083)
Cash dividends paid	(1,055,740)	(844, 592)
Other financing activities		26
Net cash flows used in financing activities Net (decrease) increase in cash and cash equivalents	(1,266,803)	(1,306,522)
Cash and cash equivalents at beginning of period	(393, 644) 1,605,546	1,161,865 443,681
Cash and cash equivalents at end of period	1,211,902	1,605,546

(English Translation of Financial Statements Originally Issued in Chinese) TAIWAN STYRENE MONOMER CORPORATION

Notes to the Parent Company Only Financial Statements

For the years ended December 31, 2019 and 2018

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

(1) Company history

Taiwan Styrene Monomer Corp. (the "Company") was incorporated on November 16, 1979, under the approval of Ministry of Economic Affairs, Republic of China (ROC). Registered address is 8F.-1, No.6, Sec.1, Roosevelt Rd., Taipei City. The Company manufactures and sells styrene monomer.

(2) Approval date and procedures of the financial statements

These parent-company-only financial statements were authorized for issue by the Board of Directors on March 11, 2020.

(3) New standards, amendments and interpretations adopted

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

The following new standards, interpretations and amendments have been endorsed by the FSC and are effective for annual periods beginning on or after January 1, 2019.

New, Revised or Amended Standards and Interpretations	Effective date per IASB
IFRS 16 "Leases"	January 1, 2019
IFRIC 23 "Uncertainty over Income Tax Treatments"	January 1, 2019
Amendments to IFRS 9 "Prepayment features with negative compensation"	January 1, 2019
Amendments to IAS 19 "Plan Amendment, Curtailment or Settlement"	January 1, 2019
Amendments to IAS 28 "Long-term interests in associates and joint ventures"	January 1, 2019
Annual Improvements to IFRS Standards 2015-2017 Cycle	January 1, 2019

Except for IFRS 16 "Leases", the Company believes that the adoption of the above IFRSs would not have any material impact on its financial statements. The extent and impact of signification changes are as follows:

IFRS 16 replaces the existing leases guidance, including IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases - Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

The Company applied IFRS 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognized in retained earnings on January 1, 2019. The details of the changes in accounting policies are disclosed below,

i) Definition of a lease

Previously, the Company determined at contract inception whether an arrangement is or contains a lease under IFRIC 4. Under IFRS 16, the Company assesses whether a contract is or contains a lease based on the definition of a lease, as explained in note 4(1).

On transition to IFRS 16, the Company elected to apply the practical expedient to grandfather the assessment of which transactions are leases. The Company applied IFRS 16 only to contracts that were previously identified as leases. Contracts that were not identified as leases under IAS 17 and IFRIC 4 were not reassessed for whether there is a lease. Therefore, the definition of a lease under IFRS 16 was applied only to contracts entered into or changed on or after January 1, 2019.

$\mathbf{ii}$ As a lessee

As a lessee, the Company previously classified leases as operating or finance leases based on its assessment of whether the lease transferred significantly all of the risks and rewards incidental to ownership of the underlying asset to the Company. Under IFRS 16, the Company recognizes right-of-use assets and lease liabilities for most leases - i.e. these leases are onbalance sheet.

The Company decided to apply recognition exemptions to short-term leases of transportation and office equipment as well as leases for which the underlying asset is of low value. At transition of the leases classified as operating leases under IAS 17, lease liabilities were measured at the present value of the remaining lease payments, discounted at the Company's incremental borrowing rate as of January 1, 2019. Right-of-use assets are measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments.

In addition, the Company used the following practical expedients when applying IFRS 16 to leases.

Applied a single discount rate to a portfolio of leases with similar characteristics.
Adjusted the right-of-use assets by the amount of IAS 37 onerous contract provision immediately before the date of initial application, as an alternative to an impairment review.
Applied the exemption not to recognize right-of-use assets and liabilities for leases with less than 12 months of lease term.
Excluded initial direct costs from measuring the right-of-use asset at the date of initial application.
Used hindsight when determining the lease term if the contract contains options to extend or terminate the lease.
iii) As a lessor

The Company is not required to make any adjustments on transition to IFRS 16 for leases in which it acts as a lessor. The Company accounted for its leases in accordance with IFRS 16 from the date of initial application.

Under IFRS 16, the Company is required to assess the classification of a sub-lease by reference to the right-of-use asset, not the underlying asset.

$iv)$ Impacts on financial statements

On transition to IFRS 16, the Company recognized additional \$55,022 thousands of right-ofuse assets and lease liabilities. When measuring lease liabilities, the Company discounted lease payments using its incremental borrowing rate at January 1, 2019. The weighted-average rate applied is 1.30%.

The explanation of differences between operating lease commitments disclosed at the end of the annual reporting period immediately preceding the date of initial application, and lease liabilities recognized in the statement of financial position at the date of initial application disclosed as follows:

	January 1, 2019
Operating lease commitment at December 31, 2018 as disclosed in the parent company only financial statements	\$ 51,725
Immaterial lease payment not disclosed in financial statements	7,554
Recognition exemption for:
short-term leases	(1,050)
lease of low-value assets	(1, 823)
	56,406
Discounted using the incremental borrowing rate at January 1, 2019 (lease liabilities recognized at January 1, 2019)	55,022

$(b)$ The impact of IFRS endorsed by FSC but not yet effective

The following new standards, interpretations and amendments have been endorsed by the FSC and are effective for annual periods beginning on or after January 1, 2020 in accordance with Ruling No. 1080323028 issued by the FSC on July 29, 2019:

New, Revised or Amended Standards and Interpretations	Effective date per IASB
Amendments to IFRS 3 "Definition of a Business"	January 1, 2020
Amendments to IFRS 9, IAS39 and IFRS7 "Interest Rate Benchmark Reform"	January 1, 2020
Amendments to IAS 1 and IAS 8 "Definition of Material"	January 1, 2020

(Continued)

The Company assesses that the adoption of the abovementioned standards would not have any material impact on its parent company only financial statements.

The impact of IFRS issued by IASB but not vet endorsed by the FSC $(c)$

As of the date, the following IFRSs that have been issued by the International Accounting Standards Board (IASB), but have vet to be endorsed by the FSC:

New, Revised or Amended Standards and Interpretations	Effective date per IASB
Amendments to IFRS 10 and IAS 28 "Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture"	Effective date to be determined by IASB
IFRS 17 "Insurance Contracts" Amendments to IAS 1 "Classification of Liabilities as Current or Non-current"	January 1, 2021 January 1, 2022

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

$(4)$ Summary of significant accounting policies

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

Statement of compliance $(a)$

These parent company only financial statements of the Company have been prepared in accordance with the Regulations Governing the preparation of Financial Reports by Securities Issuers (the "Regulations").

Basis of preparation $(b)$
$(i)$ Basis of measurement

Except for the following significant accounts, the parent company only financial statements have been prepared on a historical cost basis:

$1)$ Financial instruments measured at fair value through profit or loss are measured at fair value:
Financial assets at fair value through other comprehensive income are measured at fair 2) value:
$3)$ The defined benefit liabilities are measured at the present value of the defined benefit obligation less fair value of the plan assets.

(ii) Functional and presentation currency

The functional currency of the Company is determined based on the primary economic environment in which it operates. The parent company only financial statements are presented in New Taiwan Dollar, which is the Company's functional currency. All financial information presented in New Taiwan Dollar has been rounded to the nearest thousand.

Foreign currencies $(c)$

$(i)$ Foreign currency transactions

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

Exchange differences are generally recognized in profit or loss, except for an investment in equity securities designated as at fair value through other comprehensive income, which are recognized in other comprehensive income.

(ii) Foreign operations

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

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

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

An asset is classified as current under one of the following criteria, and all other assets are classified as non-current:

$(i)$ It is expected to be realized, or intended to be sold or consumed, in the normal operating cycle;
$(ii)$ It is held primarily for the purpose of trading;
(iii) It is expected to be realized within twelve months after the reporting period; or

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

A liability is classified as current under one of the following criteria, and all other liabilities are classified as non-current:

An entity shall classify a liability as current when:

It is expected to be settle in the normal operating cycle; $(i)$
(ii) It is held primarily for the purpose of trading:
(iii) It is due to be settled within twelve months after the reporting period; or
(iv) The Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by issuing equity instruments do not affect its classification.
Cash and cash equivalents $(e)$

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

$(f)$ Financial instruments

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

$(i)$ Financial assets

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

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

Financial assets measured at amortized cost $1)$

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

it is held within a business model whose objective is to hold assets to collect contractual cash flows: and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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

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

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

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

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

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

All financial assets not classified as amortized cost or FVOCI described as above are measured at FVTPL. On initial recognition, the Company may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

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

$4)$ Impairment of financial assets

The Company recognizes loss allowances for expected credit losses (ECL) on financial assets measured at amortized cost (including cash and cash equivalents, trade receivables, other receivables and refundable deposits).

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

debt securities that are determined to have low credit risk at the reporting date: and
other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowance for trade receivables is always measured at an amount equal to lifetime ECL.

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

The Company assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due.

The Company considers a financial asset to be in default when the financial asset is more than 90 days past due or the debtor is unlikely to pay its credit obligations to the Company in full.

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

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

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

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

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

significant financial difficulty of the borrower or issuer;

a breach of contract such as a default:
the lender of the borrower, for economic or contractual reasons relating to the borrower's financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider:
it is probable that the borrower will enter bankruptcy or other financial reorganization; or
the disappearance of an active market for a security because of financial difficulties.

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets.

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

$5)$ Derecognition of financial assets

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

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

$(ii)$ Financial liabilities and equity instruments
Classification of debt or equity $\mathbf{1}$

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

$2)$ Equity instrument

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

$3)$ Financial liabilities

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading or it is designated as such on initial recognition.

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

$4)$ Derecognition of financial liabilities

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

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

5) Offsetting of financial assets and liabilities

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

$(g)$ Inventories

Inventories are measured at the lower of cost and net realizable value. The costs of inventories are calculated using weighted-average method, and includes expenditure incurred in acquiring the inventories, production or conversion costs, and other costs incurred in bringing them to their present location and condition. In the case of manufactured inventories and work in process, cost includes an appropriate share of production overheads based on normal operating capacity.

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

(h) Non-current assets (or disposal groups) held for sale
$(i)$ Non-current assets held for sale

Non-current assets or disposal groups comprising assets and liabilities that are highly probable to be recovered primarily through sale rather than through continuing use, are reclassified as held for sale. Immediately before classification as held for sale, the assets, or components of a disposal group, are remeasured in accordance with the Company's accounting policies. Thereafter, generally, the assets or disposal groups are measured at the lower of their carrying amount and fair value less costs to sell.

Any impairment loss on a disposal group is first allocated to goodwill, and then to the remaining assets and liabilities on a pro rata basis, except that no loss is allocated to assets not within the scope of IAS $36$ – Impairment of Assets. Such assets will continue to be measured in accordance with the Company's accounting policies.

Impairment losses on assets initially classified as held for sale and any subsequent gains or losses on remeasurement are recognized in profit or loss. Gains are not recognized in excess of the cumulative impairment loss that has been recognized.

Once classified as held for sale, intangible assets and property, plant and equipment are no longer amortized or depreciated, and any equity-accounted investee is no longer equity accounted.

$(ii)$ Discontinued operations

A discontinued operation is a component of the Company's business that either has been disposed of or is classified as held for sale, and

represents a separate major line of business or geographic area of operations;
is part of a single coordinated plan to dispose of a separate major line of business or geographic area of operations; or
is a subsidiary acquired exclusively with a view to resale.

Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified as held for sale.

$(i)$ Investments in associates

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

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

The parent company only financial statements include the Company's share of the profit or loss and other comprehensive income of those associates, after adjustments to align their accounting policies with those of the Company, from the date on which significant influence commences until the date on which significant influence ceases. The Company recognizes any changes of its proportionate share in the investee within capital surplus, when an associate's equity changes due to reasons other than profit and loss or comprehensive income, which did not result in changes in actual significant influence.

Gains and losses resulting from transactions between the Company and an associate are recognized only to the extent of unrelated the Company's interest in the associate.

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

The Company discontinues the use of the equity method and measures the retained interest at fair value from the date when its investment ceases to be an associate. The difference between the fair value of retained interest and proceeds from disposing, and the carrying amount of the investment at the date the equity method was discontinued is recognized in profit or loss. The Company accounts for all the amounts previously recognized in other comprehensive income in relation to that investment on the same basis as would have been required if the associates had directly disposed of the related assets or liabilities. If a gain or loss previously recognized in other comprehensive income would be reclassified to profit or loss (or retained earnings) on the disposal of the related assets or liabilities, the Company reclassifies the gain or loss from equity to profit or loss (or retained earnings) when the equity method is discontinued. If the Company's ownership interest in an associate is reduced while it continues to apply the equity method, the Company reclassifies the proportion of the gain or loss that had previously been recognized in other comprehensive income relating to that reduction in ownership interest to profit or loss.

When the Company subscribes to additional shares in an associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment will differ from the amount of the Company's proportionate interest in the net assets of the associate. The Company records such a difference as an adjustment to investments, with the corresponding amount charged or credited to capital surplus. The aforesaid adjustment should first be adjusted under capital surplus. If the capital surplus resulting from changes in ownership interest is not sufficient, the remaining difference is debited to retained earnings. If the Company's ownership interest is reduced due to the additional subscription to the shares of the associate by other investors, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate will be reclassified to profit or loss on the same basis as would be required if the associate had directly disposed of the related assets or liabilities.

$(i)$ Investment in subsidiaries

In preparing the parent company only financial statements of the Company, investees controlled by the Company are accounted for using equity method. Under equity method, profit or loss and other comprehensive income recognized in the parent company only financial statements are the same as the the profit or loss and other comprehensive income attributable to the owners of parent in the consolidated financial statements. In addition, changes in equity recognized in the parent company only financial statement is the same as changes in equity attributable to owners of parent in the consolidated financial statements.

Change in the Company's ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions with owners.

Property, plant and equipment $(k)$
$(i)$ Recognition and measurement

Items of property, plant and equipment are measured at cost, which includes capitalized borrowing costs, less accumulated depreciation and any accumulated impairment losses.

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

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

$(ii)$ Subsequent cost

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

(iii) Depreciation

Depreciation is calculated on the cost of an asset less its residual value and is recognized in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment.

Land is not depreciated.

The estimated useful lives of property, plant and equipment for current and comparative periods are as follows:

$1)$ Buildings and structures: 4~60 years
$\mathbf{2}$ Machinery and equipment: 6~20 years
$3)$ Transportation equipment: 3 years
$4)$ Other equipment: $3 \sim 20$ years

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

$(1)$ Leases

Applicable from January 1, 2019

Identifying a lease $(i)$

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

the contract involves the use of an identified asset this may be specified explicitly or $1)$ implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified; and
$2)$ the Company has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and
$3)$ the Company has the right to direct the use of the asset throughout the period of use only if either:
the customer has the right to direct how and for what purpose the asset is used throughout the period of use; or
the relevant decisions about how and for what purpose the asset is used are predetermined and:
- the customer has the right to operate the asset throughout the period of use, without the supplier having the right to change those operating instructions; or
- the customer designed the asset in a way that predetermines how and for what purpose it will be used throughout the period of use.
(ii) As a leasee

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

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

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

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

fixed payments, including in-substance fixed payments;
variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
amounts expected to be payable under a residual value guarantee; and
payments for purchase or termination options that are reasonably certain to be exercised.

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

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

there is a change in the Company's estimate of the amount expected to be payable under a residual value guarantee: or
there is a change of its assessment on whether it will exercise a purchase option; or
there is a change in the lease term resulting from a change of its assessment on whether it will exercise an extension or termination option; or
there is any lease modifications

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

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

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

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

(iii) As a lessor

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

Applicable before December 31, 2018

(i) Lessee

Payments made under operating leases (excluding insurance and maintenance expenses) are recognized in profit or loss on a straight-line basis over the term of the lease.

(ii) Lessor

Lease income from an operating lease is recognized in income on a straight-line basis over the lease term.

(m) Intangible assets

Recognition and measurement $(i)$

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

$(ii)$ Subsequent expenditure

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

(iii) Amortization

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

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

1) Technical royalty: 15 years
2) Computer software: $3-5$ years

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

Impairment of non-financial assets $(n)$

At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other than inventories and deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset' s recoverable amount is estimated.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGU_s.

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

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount. Impairment losses are recognized in profit or loss. For non-financial assets, an impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(o) Revenue recognition
Revenue from contract with customers $(i)$

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

$1)$ Sale of goods

The Company manufactures and sells styrene monomer. The Company recognizes revenue when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer's acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Company has objective evidence that all criteria for acceptance have been satisfied. A receivable is recognized when the goods are delivered as this is the point in time that the Company has a right to an amount of consideration that is unconditional.

$2)$ Financing components

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

Employee benefits $(p)$
Defined contribution plans $(i)$

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

(ii) Defined benefit plans

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

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

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

(iii) Short-term employee benefits

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

$(q)$ Income taxes

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

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

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

$(i)$ temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits (losses) at the time of the transaction;
$(ii)$ temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
(iii) taxable temporary differences arising on the initial recognition of goodwill.

Deferred taxes are measured at tax rates that are expected to be applied to temporary differences when they reserve, using tax rates enacted or substantively enacted at the reporting date.

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

$\ddot{\mathbf{i}}$ the Company has a legally enforceable right to set off current tax assets against current tax liabilities: and
$\mathbf{ii}$ the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:
the same taxable entity; or a)
different taxable entities which intend to settle current tax assets and liabilities on a net $b)$ basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered

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

$(r)$ Earnings per share

The Company discloses basic and diluted earnings per share attributable to ordinary shareholders of the Company. Basic earnings per share is calculated as the profit attributable to ordinary shareholders of the Company divided by the weighted average number of ordinary shares outstanding. Diluted earnings per share is calculated as the profit attributable to ordinary shareholders of the Company divided by the weighted average number of ordinary shares outstanding after adjustment for the effects of all potentially dilutive ordinary shares.

$(s)$ Operating segments

The Company has disclosed information about operating segments in the consolidated financial statements. Therefore, no segmental information is disclosed in the parent company only financial statements.

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

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

There is no information about judgments made in applying accounting policies that might have the most significant effects on the amounts recognized in the parent company only financial statements.

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

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year is impairment assessment of investments accounted for using equity method. The Company compares the carrying amounts and the recoverable amount (the greater of its value in use and its fair value less costs to sell) of investments accounted for using equity method to determine whether there is any impairment. In the process of determining the recoverable amount, the Company rely on an appraisal report issued by an expert which had been prepared based on market approach and income approach. Any changes in economic conditions could result in significant impairment charges.

(6) Explanation of significant accounts

Cash and cash equivalents $(a)$

	ресешрег эт. 2019	ресешрег эт, 2018
Petty cash	\$ 160	160
Deposits in bank	557,281	639,981
Cash equivalents
Bonds under resell agreements	600,000	850,000
Time deposits due within one year	54,461	115,405
	1,211,902	1,605,546

$D$ casmban 21

$D_2$ and $L_1$ and $21$

$(b)$ Current financial assets at fair value through profit or loss

		December 31, 2019	December 31, 2018
	Mandatorily measured at fair value through profit or loss: Listed stocks	39,100	103,820
(c)	Accounts receivable

	December 31, 2019	December 31, 2018
Accounts receivable	816,073	900,306
Less: Loss allowance	(41	(45)
	816,032	900,261

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

		December 31, 2019
	Gross carrying amount	Weighted- average loss rate	Loss allowance provision
Current	816,073	$0.005\%$

(Continued)

		December 31, 2018
	Gross carrying	Weighted-	Loss allowance
	amount	average loss rate	provision
Current	900,306	0.005%	45

The movement in the allowance for notes and accounts receivable was as follows:

		For the years ended December 31
	2019	2018
Beginning balance		$\overline{\phantom{a}}$
Impairment losses (gains) recognized		43
Ending balance

(d) Inventories

	December 31, 2019	December 31, 2018
Finished goods	185,730 S	134,928
By-product	3,579	6,320
Semi-finished products	52,523	226,982
Work in progress	39,264	50,417
Raw materials	89,012	181,730
Supplies	57,457	40,899
	427,565	641,276

In 2019 and 2018, inventories recognized as cost of sales amounted to \$10,368,845 thousand and \$12,829,579 thousand, respectively.

Except for the transfer of inventory to operating costs from sales, other losses (gains) directly included in operating costs are as follows:

2019	2018
20.845	3,567
	For the years ended December 31

None of the inventories of the Company was pledged as collateral on December 31, 2019 and 2018.

$(e)$ Prepayments

	December 31, 2018
Office supplies	82,788	68,621
Prepayment for purchases	3,900	4,153
Overpaid sales tax	16,839	÷
Others	16,807	13,408
	120,334	86,182

$(f)$ Non-current assets (or disposal groups) held for sale, net

As of December 24, 2019, the Company obtained an approval of the Board of Directors to sell all the shares of Lei-Ting Construction Corporation. The efforts of sale have commenced, and a sale is expected to be completed by first quarter in 2020. Therefore, the Company discontinued the use of equity method and reclassified the investment to non-current assets (or disposal groups) held for sale.

The expected selling price less costs to sell is greater than the carrying amount; therefore, no impairment loss has been recognized.

Non-current financial assets at fair value through other comprehensive income $(g)$

		December 31, 2018
Equity investments:
Domestic non-listed stocks	374,744	155,434
Foreign non-listed equity investments	21,417	26,143
	396,161	181,577

$(i)$ The Company designated the investments shown above at fair value through other comprehensive income because these equity securities represent those investments that the Company intends to hold for long-term strategic purposes, not for trading purposes. During 2019 and 2018, the dividends of \$74 thousand and \$2,777 thousand, respectively, related to equity investments at fair value through other comprehensive income held on the years then ended were recognized.
(ii) In April 2019, the Company sold its shares of Taiwan Insulation Material Industrial Co., Ltd., which were measured at fair value through other comprehensive income. The shares sold had a fair value of \$2,493 thousand and the Company realized a loss of \$90 thousand, which was already included in other comprehensive income. The aforementioned loss has been transferred to retained earnings.
(iii) For market risk; please refer to note $6(y)$ .
(iv) None of the above-mentioned financial assets had been pledged as collateral as of December 31, 2019 and 2018.
(h) Investments accounted for using equity method (including credit balance)

Investment accounted for using the equity method were follows ¹

	December 31, 2019	December 31, 2018
Subsidiaries	1,582,227	1,917,593
Associates	1.175.691	1,505,380
	2,757,918	3,422,973

Subsidiaries $(i)$

Please refer to the consolidated financial report for the year ended, 2019.

$(ii)$ Associates

Associates of the Company consisted of the following:

		December 31, 2019		December 31, 2018
		Amount	Share- holding (%)	Amount	Share- holding (%)
Grand Cathay Venture Capital Co., Ltd.	S.	331,171	25.00	318,400	25.00
Wonderland Enterprise Co., Ltd.		540,896	37.04	626,867	49.38
Yuan-Jie Investment Co., Ltd.			۰	224,060	32.31
Yu-Jie Investment Co., Ltd.		266,507	32.80	299,718	32.80
Yuan-Yao Development Co., Ltd.				36.335	33.22
Gvision-USA, Inc.		37,117	44.44
		\$1,175,691		1,505,380

On March 8, 2019, the Company sold all of its shares of Yuan-Yao Development Co. Ltd., at the price of \$41,568 thousand, and the gain on disposal of investments amounted to \$2,682 thousand, which was accounted for under the other gains and losses of the comprehensive income statements; meanwhile, the unrealized losses of \$27,278 thousand from investments measured at fair value through other comprehensive income which shall not be reclassified to profit and loss, had been reclassified to retained earnings at the time of disposal.

Wonderland Enterprise Co., Ltd. conducted a capital increase by cash of \$200,000 thousand on January 15, 2019. The Company did not participate in the capital increase proportionally, and its shares of the company dropped to 37.04%. The Company reduced the capital surplus of \$4,217 thousand and retained earnings of \$78,025 thousand, respectively, due to the decrease of its ownership. Meanwhile, the unrealized losses of \$15,826 thousand from investments measured at fair value through other comprehensive income which shall not be reclassified to profit and loss, had been reclassified to retain earnings proportionally.

Yuan-Jie Investment Co., Ltd. conducted a capital increase by cash of \$517,000 thousand on December 31, 2019. The Company did not participate in the capital increase proportionally, and its shares of the company decreased to 19.09%. The Company increased the capital surplus of \$11,347 thousand due to the decrease of its ownership. Meanwhile, the unrealized gains of \$2,716 thousand from investments measured at fair value through other comprehensive income which shall not be reclassified to profit and loss, and exchange difference of \$122 thousand has been reclassified to retain earnings and to profit and loss accordingly. The Company lost significant influence of the company and reclassified the investment to FVOCI.

To assess the impairment of Grand Cathay Venture Capital Co., Ltd., an appraisal report issued by an expert had been prepared based on market approach and income approach. In 2019 and 2018, a reversal of impairment loss amounting to \$8,766 thousand and \$19,834 thousand was recognized, respectively.

The Company's financial information for investments accounted for using equity method that are individually insignificant was as follows:

	For the years ended December 31
		2019	2018
Attributable to the Company:
Net income	£.	109.713	46.459
Other comprehensive income		(121, 498)	(245, 363)
Total comprehensive income		(11,785)	(198,904)

None of the investments using equity method of the Company was pledged as collateral.

$(i)$ Changes in ownership interests in subsidiaries

On June 30, 2019, Lei-Ting Construction Corporation issued new shares to merge with Jing-Shou Engineering Co., Ltd. and Lei-Ting Construction Corporation is the surviving company.

On April 23, 2019, Asia Carbons & Technology Inc. conducted a capital reduction of \$450,000 thousand to make up for the deficit, and the company conducted a capital increase by cash of \$100,097 thousand on May 28, 2019. The Company reduced the capital surplus of \$15,062 thousand due to the aforementioned transitions.

Loss control of subsidiaries $(i)$

Gvision-USA, Inc. conducted a capital injection in the form of cash worth 50,000 shares on May 6. 2019. The Company did not participate in the capital increase proportionally, and its shares of the company dropped to 44.44%. After the re-election of the directors and supervisors on May 21, 2019, the Company did not obtain more than half of the vote in the Board of Directors, so it lost control of the company. The Company reduced capital surplus by \$8,499 thousand for the decrease of its ownership interest in Gvision-USA, Inc. The exchange differences recognized under other comprehensive income were reclassified proportionally to profit and loss by \$819 thousand.

The carrying amounts of assets and liabilities of Gvision-USA, Inc. on May 21, 2019 were as follows:

Cash and cash equivalents	\$ 23,280
Inventories	23,978
Accounts receivable, net	28,102
Prepayments	17,675
Property, plant and equipment	214
Right-of-use assets	6,559
Refundable deposits	588
Accounts payable and other payables	(3,274)
Lease liabilities	(6, 679)
Guarantee deposits received	(1, 129)
Carrying amount of net assets	89,314

(Continued)

(k) Property, plant and equipment

The movements of the property, plant and equipment of the Company were as follows:

Cost:	Land	Land improvements	Buildings and structures	Machinery and equipment	Transportation equipment	Leased assets	Other equipment	Construction in progress	Total
Balance as of January 1, 2019 \$	812,199	8.462	217,755	7,119,129	9,482	24,440	492,248	27,256	8,710,971
Additions	÷			÷.		×	£	254,791	254,791
Disposals	٠		٠	(37, 775)	(1,221)	(24, 440)	(24, 160)	$\overline{\phantom{a}}$	(87, 596)
Reclassification			8,650	161,845			23,652	(192, 562)	1,585
Balance as of December 31, s 2019	812,199	8,462	226,405	7,243,199	8,261		491,740	89,485	8,879,751
Balance as of January 1, 2018 \$	812.199	8.462	217,195	7,071,329	8,587	٠	473,665	900	8,592,337
Additions				Ξ	895		190	126,882	127,967
Disposals				(11, 315)		Q	(6, 564)	z	(17, 879)
Others			560	59,115		24,440	24,957	(100, 526)	8,546
Balance as of December 31, s 2018	812,199	8,462	217,755	7,119,129	9,482	24,440	492,248	27,256	8,710,971
Accumulated depreciation:
Balance as of January 1, 2019 \$	œ.	8,341	94,589	5,627,842	8,711	2,062	302,300	i.	6,043,845
Depreciation	÷	21	6,223	157,229	179	2,633	33,251	×	199,536
Disposals				(37, 775)	(1,026)	(4,695)	(13,800)		(57, 296)
Balance as of December 31, s 2019		8,362	100,812	5,747,296	7,864		321,751		6,186,085
Balance as of January 1, 2018 \$		8.319	88,535	5,484,788	8,587		278,027		5,868,256
Depreciation		22	6,054	154,369	124	2,062	30,837		193,468
Disposals				(11,315)			(6, 564)		(17, 879)
Balance as of December 31. s 2018		8,341	94,589	5,627,842	8,711	2,062	302,300		6,043,845
Carrying value:
Balance as of December 31, s 2019	812,199	100	125,593	1,495,903	397		169,989	89,485	2,693,666
Balance as of January 1, 2018 S	812,199	143	128,660	1,586,541			195,638	900	2,724,081
Balance as of December 31, s 2018	812,199	121	123,166	1,491,287	771	22,378	189,948	27,256	2,667,126

As of December 31, 2019 and 2018, the property, plant and equipment of the Company had been pledged as collateral for loans; please refer to note 8.

$\infty$ .

Right-of-use assets $(1)$

The cost and accumulated depreciation of leased land, buildings and structures, and transportation equipment of the Company were as follows:

Cost:	Land	Buildings and structures	Transportation equipment	Office equipment	Total

Balance as of January 1, 2019	\$
Effects of retrospective application (IFRS 16)	542	50,413	4,067		55,022
Balance as of January 1, 2019 after adjustments	542	50,413	4,067		55,022
Additions			5,434	4,814	10,248
Lease modification		(49, 591)	1,376		(48,215)
Balance as of December 31, 2019	542	822	10,877	4,814	17,055
Accumulated depreciation:
Balance as of January 1, 2019	\$
Depreciation	224	7,873	2,665	241	11,003
Lease modification		(7,293)			(7,293)
Balance as of December 31, 2019	224	580	2,665	241	3,710
Carrying amount:
Balance as of December 31, 2019	318	242	8,212	4,573	13,345

(m) Intangible assets

The movements of intangible assets of the Company were as follows:

		Technical royalty	Computer software	Total
Cost:
Balance as of January 1, 2019	Ŝ.	14,623	1,000	15,623
Additions			5,030	5,030
Balance as of December 31, 2019		14,623	6,030	20,653
Balance as of January 1, 2018 (balance as of December 31, 2018)		14,623	1,000	15,623
Accumulated amortization:
Balance as of January 1, 2019	\$	5,524	833	6,357
Amortization		975	1,223	2,198
Balance as of December 31, 2019		6,499	2,056	8,555
Balance as of January 1, 2018	\$	4,549	500	5,049
Amortization		975	333	1,308
Balance as of December 31, 2018		5,524	833	6,357
Carrying value:
Balance as of December 31, 2019	S	8,124	3,974	12,098
Balance as of January 1, 2018	\$	10,074	500	10,574
Balance as of December 31, 2018	S	9,099	167	9,266

(Continued)

(n) Other non-current assets

	December 31, 2019	December 31, 2018
Prepayments for equipment	-	1,426
Long-term prepaid expenses	57.354	36,757
	57,354	38,183

Except catalysts shall be allocated by actual consumption, the rest of prepaid expenses will be expensed on a straight line basis over the economic lives.

Other payables $(0)$

	December 31, 2019	December 31, 2018
Accrued payroll	31,236	100,880
Compensation payable to directors and supervisor	23,949	41,073
Employee bonus payable	23,949	33,086
Compensated absences	20,000	16,824
Utility payable	14,107	14,838
Payables on equipment	24,966	14,649
Dividends payable	9,870	10,042
Other payables—other	25,084	40,610
Total	173,161	272,002

(p) Long-term borrowings

Long-term borrowings of the Company were as follows:

	December 31, 2018
		Range of
	Currency	interest rate	Due year		Amount
Secured bank loans	NTD	$1.30 - 1.87\%$	2019~2021	S	199,980
Less: current portion					88,880
Total					111,100
Unused long-term credit lines					250,000

For the collateral for long-term borrowings, please refer to note 8.

(q) Lease liabilities

Lease liabilities of the Company were as follows

		December 31, 2019
Current	⊾л	.851
Non-current	٠П	8,173

(Continued)

For the maturity analysis, please refer to $6(y)$ .

The amounts recognized in profit or loss were as follows:

	For the year ended December 31, 2019
Interest on lease liabilities	483
Expenses relating to short-term leases	830
Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets The amounts recognized in the statement of cash flows was as follows:	S 428
	For the year ended December 31, 2019
Total cash outflow for leases	12,824

Employee benefits $(r)$

Defined benefit plans $(i)$

Reconciliations of defined benefit obligations at present value and plan assets at fair value are as follows:

	December 31, 2019	December 31, 2018
Present value of defined benefit obligations	265,784	280,751
Fair value of plan assets	(201,339)	(206, 625)
Net defined benefit liabilities	64.445	74,126

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

Composition of plan assets $1)$

The Company allocates pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds are managed by the Labor Pension Fund Supervisory Committee. With regard to the utilization of the funds, minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with interest rates offered by local banks.

The Company's Bank of Taiwan labor pension reserve account balance amounted to \$201,339 thousand as of December 31, 2019. For information on the utilization of the labor pension fund assets, including the asset allocation and yield of the fund, please refer to the website of the Labor Pension Fund Supervisory Committee.

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

The movements in the present value of defined benefit obligations of the Company were as follows:

		For the years ended December 31
	2019		2018
Defined benefit obligations at January 1	S	280,751	330,692
Current service costs and interest cost		4,204	5,073
Remeasurements of defined benefit liabilities
$-$ Actuarial gains and losses arising from experience adjustments		(3,346)	(13,032)
Benefits paid		(15, 825)	(41, 982)
Defined benefit obligations at December 31		265,784	280,751

$3)$ Movements in fair value of plan assets

The movements in the fair value of the defined benefit plan assets of the Company were as follows:

	For the years ended December 31
	2019	2018
\$ Fair value of plan assets at January 1	206,625	237,771
Interests income	2,070	2,275
Remeasurements of defined benefit assets
-Return on plan assets (excluding interest income)	7,821	7,899
Contributions	648	662
Benefits paid	(15, 825)	(41,982)
Fair value of plan assets at December 31	201,339	206,625

4) Expenses recognized in profit or loss

The expenses recognized in profit or loss of the Company were as follows:


	2019	2018
Current service costs	1.396	1.872
Net interest on defined benefit liabilities	738	926.
	2.134	2.798

(Continued)

$\overline{a}$

	For the years ended December 31
		2019	2018
Operating cost		1,543	2.069
Operating expenses		591	729.
	S	2,134	2,798

Remeasurement values of the defined benefit liabilities recognized in other $5)$ comprehensive income

The remeasurement values of the defined benefit liabilities recognized in other comprehensive income of the Company were as follows:

	For the years ended December 31
	2019	2018
Recognized during the period	(11.167)	(20.931)

Actuarial assumptions $6)$

Principal actuarial assumptions at the end of the reporting period were as follows:

	December 31,	December 31,
	2019	2018
Discount rate	1.00%	$1.00\%$
Future salary increase rate	1.50%	1.50%

The expected allocation payment to be made by the Company to the defined benefit plans for the one-year period after the reporting date is \$648 thousand.

The weighted-average lifetime of the defined benefit plans is 4.2 years.

$(7)$ Sensitivity analysis

Calculations of the present value of the defined benefit obligation were based on the judgements and estimates made on the actuarial assumptions as of the balance sheet date, including discount rate, employee turnover rate and future salary changes. Any possible changes in the actuarial assumptions would affect the defined benefit obligation at the reporting date.

If the actuarial assumptions had changed, the impact on the present value of the defined benefit obligations shall be as follows:

		Influence of defined benefit obligations
		Increase	Decrease
December 31, 2019
Discount rate (changed by $0.25\%$ )	S	(2,132)	2,186
Future salary increase rate (changed by 1%)		9,178	(8, 466)

	Influence of defined benefit obligations
	Increase	Decrease
December 31, 2018
Discount rate (changed by $0.25\%$ )	(2,648)	2.719
Future salary increase rate (changed by 1%)	11,162	(10,232)

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown above. The method used in the sensitivity analysis is consistent with the calculation of pension liabilities in the balance sheets.

The calculation and assumptions used in the sensitivity analysis during the year were consistent with prior year.

(ii) Defined benefit plans

The Company allocates 6% of each employee's monthly wages to the labor pension personal account at the Bureau of Labor Insurance in accordance with the provisions of the Labor Pension Act. Under these defined contribution plans, the Company allocates a fixed amount to the Bureau of Labor Insurance without additional legal or constructive obligation.

The pension costs incurred from the contributions to the Bureau of the Labor Insurance amounted to \$8,423 thousand and \$9,619 thousand for the years ended December 31, 2019 and 2018, respectively.

$(s)$ Income taxes

The components of income tax in the years 2019 and 2018 were as follows:

	For the years ended December 31
		2019	2018
Current income tax expense:
Current period	$\mathbb{S}$	150,754	355,310
Adjustment for prior periods		493	247
		151,247	355,557
Deferred income tax expense:
Origination and reversal of temporary difference		(3,913)	(3,187)
Change in unrecognized deductible temporary differences		(343)
		(4,256)	(3,187)
Income tax expense		146,991	352,370

The amount of income tax recognized in other comprehensive income for 2019 and 2018 was as follows:

		2018

	(2.233)	(3.249)
		2019

Reconciliation of income tax and profit before tax for 2019 and 2018 is as follows:

	For the years ended December 31
		2019	2018
Profit before tax		1,029,056	1,568,771
Income tax using the Company's domestic tax rate	S	205,811	313,754
Non-deductible expenses		22,030	23,471
Tax-exempt income		(558)	(1,576)
Investment loss		(80, 442)	(6,003)
Change in unrecognized deductible temporary differences		(343)
Adjustment for prior periods		493	247
Tax on undistributed profit			22,909
Investment tax credit			(432)
Total		146,991	352,37

(iii) Deferred tax assets and liabilities

$\mathbf{I}$ Recognized deferred tax assets and liabilities

Movements of recognized deferred tax assets and liabilities for the years ended December 31, 2019 and 2018 were as follows:

Deferred Tax Liabilities:

	Land value increment tax	Other	Total
Balance at January 1, 2019	173,509	٠	173,509
Recognized in profit or loss		1,145	1.145
Balance at December 31, 2019	173,509	1,145	174,654
Balance at January 1, 2018 (Balance \$	173,509	-	173,509
at December $31, 2018$

For the years ended December 31

Deferred Tax Assets:

		Decline in Value of Inventories	accounted for using the equity method	Defined benefit pension plans	Accumulated compensated absences	Total
Balance at January 1, 2019	\$	732	3,003	14,825		18,560
Recognized in profit or loss		4,169	(3,003)	297	3.938	5,401
Recognized in other comprehensive income				(2,233)		(2, 233)
Balance at December 31, 2019	S	4,901		12,889	3,938	21,728
Balance at January 1, 2018	\$	16	2,810	15,796	٠	18,622
Recognized in profit or loss		716	193	2,278	۰	3,187
Recognized in other comprehensive income				(3,249)		(3,249)
Balance at December 31, 2018		732	3,003	14,825		18,560

Investments

The Company's income tax return for the year 2017 had been examined by the tax authorities.

$(t)$ Capital and other equity

Ordinary shares $(i)$

As of December 31, 2019 and 2018, the number of authorized ordinary shares were 6.750.000 thousand shares with par value of \$10 per share. As of December 31, 2019 and 2018, of 527,870 thousand shares were issued. All issued shares were paid up upon issuance.

(ii) Capital surplus

The balances of capital surplus of the Company were as follows:

	December 31, 2019	December 31, 2018
Difference arising from subsidiary's share price and its carrying value	8,953	24,015
Changes in ownership interests in subsidiaries	22,118	32,183
Changes in equity of investments in associates using equity method	11,347	4,217
Total	42,418	60,415

According to the R.O.C. Company Act, capital surplus can only be used to offset a deficit, and only the realized capital surplus can be used to increase the common stock or be distributed as cash dividends. The aforementioned realized capital surplus includes capital surplus resulting from premium on issuance of capital stock and earnings from donated assets received. According to the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, capital increases by transferring capital surplus in excess of par value should not exceed 10% of the total common stock outstanding.

(iii) Retained earnings

The Company's Article of Incorporation stipulates that Company's net earnings should first be used to offset the prior years' deficits, if any, before paying any income taxes. Of the remaining balance, 10% is to be appropriated as legal reserve, and then any remaining profit together with any undistributed retained earnings shall be distributed according to the distribution plan proposed by the Board of Directors and submitted to the stockholders' meeting for approval.

In general, cash dividends shall not be less than 30% of total dividends. However, based on the need to respond to changes in the industry, major investment plans and improve the financial structure, or in the case of sudden major capital needs, the cash dividend payout rate could be adjusted to 10% to 30%. If the cash dividend is less than \$0.1 per share, it will not be issued. and the stock dividend will be paid instead.

$1)$ Legal reserve

When a company incurs no loss, it may, pursuant to a resolution by a shareholders' meeting, distribute its legal reserve by issuing new shares or by distributing cash, and only the portion of legal reserve which exceeds 25% of capital may be distributed.

$2)$ Special reserve

In accordance with Ruling No. 1010012865 issued by the FSC on April 6, 2012, a portion of current-period earnings and undistributed prior-period earnings shall be reclassified as special earnings reserve during earnings distribution. The amount to be reclassified should equal the current-period total net reduction of other shareholders' equity. Similarly, a portion of undistributed prior-period earnings shall be reclassified as special earnings reserve (and does not qualify for earnings distribution) to account for cumulative changes to other shareholders' equity pertaining to prior periods. Amounts of subsequent reversals pertaining to the net reduction of other shareholders' equity shall qualify for additional distributions.

$3)$ Earnings distribution

On June 28, 2019 and June 26, 2018, the shareholders' meetings resolved to distribute the 2018 and 2017 earnings. These earnings were appropriated as follows and the related information is available on the Market Observation Post System website of the Taiwan Stock Exchange:

			2017
	Ratio of allotment of shares (NTD)	Amount	Ratio of allotment of shares (NTD)	Amount
Dividends distributed to ordinary shareholders:
Cash	2.00S	1,055,740	1.60	844,592

(iv) Other equity

Changes of other equity of the Company were as follows:

		Exchange differences on translation of foreign financial statements	Unrealized gains (losses) from financial assets measured at fair value through other comprebensive income	Total
Balance as of January 1, 2019		\$ (2, 298)	(419, 559)	(421, 857)
Exchange differences on foreign operations		(602)		(602)
Exchange differences on subsidiaries, associates and joint ventures accounted for using equity method		(7,071)		(7,071)
Unrealized losses from financial assets measured at fair value through other comprehensive income			(7, 872)	(7, 872)
Unrealized gains from financial assets measured at fair value through other comprehensive income, subsidiaries, associates and joint ventures accounted for
using equity method			(136, 129)	(136, 129)
Disposal of investments accounted for using equity method			27,278	27,278
Changes in ownership interests in subsidiaries		(819)		(819)
Changes in ownership interests in associates		(123)	13,110	12,987
Cumulative gains reclassified to retained earnings on disposal of investments in equity instruments designated at fair value through other comprehensive income			(47, 164)	(47, 164)
Balance as of September 30, 2019		\$ (10, 913)	(570, 336)	(581, 249)
	Exchange differences on translation of foreign financial statements	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income	Unrealized gains (losses) on available- for-sale investments	Total
Balance as of January 1, 2018	\$ (3,754)		101,265	97,511
Effects of retrospective application		(190, 286)	(101, 265)	(291, 551)
Balance as of January 1, 2018 after adjustments	(3,754)	(190, 286)		(194,040)
Exchange differences on foreign operations	1,453			1,453
Exchange differences on subsidiaries, associates and joint ventures accounted for using equity method	3			3
Unrealized gains from financial assets measured at fair value through other comprehensive income		(5,050)		(5,050)

	Exchange differences on translation of foreign financial statements	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income	Total
Unrealized losses from financial assets measured at fair value through other comprehensive income, subsidiaries, associates and joint ventures accounted for using equity method		(242, 232)	(242, 232)
Cumulative losses reclassified to retained earnings on disposal of investments in equity instruments designated at fair value through
other comprehensive income		18,009	18,009
Balance as of September 30, 2018	(2, 298)	(419, 559)	(421, 857)

(u) Earning per share

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

Basic earnings per share $(i)$

	For the years ended December 31
	2019	2018
Profit attributable to the Company	882,065	1,216,401
Weighted-average number of ordinary shares
outstanding	527,870	527,870
Earnings per share (NTD)	1.67	2.30

(ii) Diluted earnings per share

	2019	2018
Profit attributable to the Company (diluted)	882,065	1,216,401
Weighted-average number of ordinary shares outstanding	527,870	527,870
Effect of dilutive potential ordinary shares
Employee remuneration in stock	1,807	1,785
Weighted-average number of ordinary shares outstanding (diluted)	529,677	529,655
Diluted earnings per share (NTD)	1.67	2.30

For the years ended December 31

(v) Revenue from contracts with customers

$(i)$ Disaggregation of revenue

	For the years ended December 31
		2019	2018
Primary geographical markets:
Asia	\$	11,645,136	14,784,963
America		47,142	14,418
Others		25,616	7,163
		11,717,894	14,806,544
Major products/services lines:
Commodity sales revenue	\$	11,696,449	14,806,544
Other operating revenue		21,445
		11,717,894	14,806,544
Contract balances

$(ii)$ es

	December 31, 2019	December 31, 2018	January 1, 2018
Contract liabilities-unearned sales revenue	7,829	97,508	7,830

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

The major change in the balance of contract assets and contract liabilities is the difference between the time frame in the performance obligation to be satisfied and the payment to be received.

(w) Non-operating income and expenses

$(i)$ Other income

Details of other income of the Company were as follows:

	For the years ended December 31
	2019	2018
Interest income	7,076	4,168
Rent income	1,684	6,594
Dividend income	2,791	7,881
Others	10,788	3,631
Total	22,339	22,274

(ii) Other gains and losses

	For the years ended December 31
	2019	2018
Foreign exchange gains (losses)	\$ 5,109	(18, 471)
Gains on disposals of non-current assets (or disposal groups) held for sale	3,057
Gains (losses) on disposals of investments	3,624	(21,204)
Gains (losses) on financial assets at fair value through profit or loss	7,373	(49,084)
Losses on disposals of property, plant and equipment	(26,999)
Reversal of impairment loss	8,622	19,312
Gain on lease modification	167
Others	(97)	(66)
Total	856	(69, 513)
Tinanan ang an

(iii) Finance costs

		For the years ended December 31
	2019	2018
Interest expense		7.508

$(x)$ Employee compensation and directors and supervisors' remuneration

According to the Article of Incorporation, once the Company has annual profit, it should appropriate 1%~5% of the profit to its employees and 2.5% or less to its directors and supervisors as remuneration (since January 31, 2019, the Audit Committee has been set up to replace the supervisors' authority). However, if the Company still has accumulated deficit, the profit should be reserved to offset the deficit.

For the years ended December 31, 2019 and 2018, the renumerations to employees amounted to \$23,949 thousand and \$33,086 thousand, respectively, and the remuneration to directors and supervisors amounted to \$23,949 thousand and \$41,073 thousand, respectively. The estimated amounts mentioned above are calculated based on the net profit before tax, excluding the remuneration to employees, directors and supervisors of each period, multiplied by the percentage of remuneration to employees, directors and supervisors as specified in the Company's articles. These remunerations were expensed under operating costs or operating expenses during 2019 and 2018. Related information would be available at the Market Observation Post System website. If there are any subsequent adjustments to the actual remuneration amounts, the adjustment will be regarded as changes in accounting estimates and will be reflected in profit or loss in the following year. The amounts, as stated in the consolidated financial statements are identical to those of the actual distributions for 2018.

Financial instruments $(y)$

Credit risk $(i)$
$1)$ Credit risk exposure

The carrying amount of financial assets and contract assets represents the maximum amount exposed to credit risk.

$2)$ Concentration of credit risk

As of December 31, 2019 and 2018, the Company reviewed the concentrations of credit risk arising from the major top ten customers, and it was 84% and 82% of the total accounts receivable, respectively. The concentrations of credit risk of the remaining accounts receivable are relatively small.

Credit risk of receivables $3)$

For credit risk exposure of note and trade receivables, please refer to note $6(c)$ . Other financial assets at amortized cost include time deposits and other receivables, etc. The allowance for the receivables is measured by lifetime expected credit losses. The remaining financial assets are measured by 12-month expected credit losses.

(ii) Liquidity risk

The following table shows the contractual maturities of financial liabilities, including estimated interest payments.

		Carrying amount	Contractual cash flows	Within 1 year	1-2 years	2-5 years	Over 5 years
December 31, 2019
Non-derivative financial liabilities
Accounts payable	\$	1,160,265	1,160,265	1,160,265			$\overline{\phantom{a}}$
Lease liabilities		13,024	13,346	5,010	3,920	4,416
		1,173,289	1,173,611	1,165,275	3.920	4,416
December 31, 2018
Non-derivative financial liabilities
Accounts payable	\$	1,276,961	1,276,961	1,276,961			$\overline{\phantom{a}}$
Long-term borrowings		199.980	204.769	91,223	113,546
Deposit received		1.140	1.140	1.140
	S	1.478,081	1,482,870	1,369,324	113,546

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

(iii) Market risk

$1)$ Currency risk

The Company's significant exposure to foreign currency risk was as follows:

December 31, 2019
	Exchange rate	NTD	Foreign currency	Exchange rate	NTD


\$ 2,662	29.980	79,807	4.342	30.715	133,380


14,685	29.980	440,256	20,127	30.715	618,203
	Foreign currency				December 31, 2018

The Company's exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, accounts receivable, other receivables, accounts payable and other payables that are denominated in foreign currency. A strengthening (weakening) of 1% of the NTD against the USD as at December 31, 2019 and 2018, for the years ended December 31, 2019 and 2018, respectively, would have increased (decreased) net profit before tax by \$3,604 thousand and \$4,848 thousand. The analysis is performed on the same basis.

For years 2019 and 2018, foreign exchange gain (loss) (including realized and unrealized portions) amounted to \$5,109 thousand and \$(18,471) thousand, respectively.

$2)$ Interest rate risk

Please refer to the notes on liquidity risk management and interest rate exposure of the Company's financial assets and liabilities.

The following sensitivity analysis is based on the exposure to the interest rate risk of derivative and non-derivative financial instruments on the reporting date. Regarding assets with variable interest rates, the analysis is based on the assumption that the amount of assets outstanding at the reporting date was outstanding through the year. The rate of change is expressed as the interest rate increases or decreases by 1% when reporting to management internally, which also represents the management's assessment of the reasonably possible interest rate change.

There is no financial liabilities at variable rates as of December 31, 2019. If the interest rate had increased/decreased by 1%, the Company's profit before tax would have decreased and increased by \$3,514 thousand for the years ended December 31, 2018 with all other variable factors remaining constant. This is mainly due to the Company's loan at variable rates.

$3)$ Other market price risk

If the securities price at the reporting date changes (the analysis is performed on the same basis and all other variable factors remaining constant), the effect for comprehensive income is illustrated below:

	For the years ended December 31
	2019		2018
	Prices of securities Other comprehensive		Other comprehensive
at the reporting date	income after tax	Net income	income after tax	Net income
Increasing 1%	3,962	391	1,816	1,038
Decreasing 1%	(3,962)	(391)	(1, 816)	(1,038)

(iv) Fair value information

$1)$ Types and fair value of financial instruments

Financial assets measured at fair value through profit or loss and financial assets at fair value through other comprehensive income are measured at fair value on the basis of repeatability. The carrying amount and fair value of the financial assets and liabilities. including the information on fair value hierarchy were as follows; however, except as described in the following paragraphs, for financial instruments not measured at fair value whose carrying amount is reasonably close to the fair value, and lease liabilities, disclosure of fair value information is not required:

			December 31, 2019
				Fair value
	Book value	Level 1	Level 2	Level 3	Total
Financial assets at fair value through profit or loss: Financial assets mandatorily at fair value through profit or loss	£. 39,100	39,100			39,100
Financial assets at fair value through other comprehensive income:
Domestic and foreign non- listed stocks	396,161			396,161	396,161
Financial assets measured at amortized cost:
Cash and cash equivalents	1,211,902
Accounts receivable	816,032
Other receivables	964
Refundable deposits	3,873
Subtotal	2,032,771
Total	\$2,468,032	39,100		396,161	435,261
Financial liabilities measured at amortized cost:
Accounts payable	\$ 1,089,348
Other payables	70,917
Lease liabilities	13,024
Total	1,173,289

(Continued)

			December 31, 2018
	Fair value
	Book value	Level 1	Level 2	Level 3	Total
Financial assets at fair value through profit or loss: Financial assets mandatorily at fair value through profit or loss	\$ 103,820	103,820			103,820
Financial assets at fair value through other comprehensive income:
Domestic and foreign non- listed stocks Financial assets measured at	181,577			181,577	181,577
amortized cost:
Cash and cash equivalents	1,605,546
Accounts receivable	900,261
Other receivables	47,947
Refundable deposits	3,962
Subtotal	2,557,716
Total	\$2,843,113	103,820		181,577	285,397
Financial liabilities measured at amortized cost:
Accounts payable	1,204,490 S
Other payables	72,471
Deposit received	1,140
Long-term borrowings	199,980
Total	1,478,081

$2)$ Valuation techniques for financial instruments measured at fair value

A financial instrument is regarded as being quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm's-length basis. Whether transactions are taking place 'regularly' is a matter of judgment and depends on the facts and circumstances of the market for the instrument.

Quoted market prices may not be indicative of the fair value of an instrument if the activity in the market is infrequent, the market is not well-established, only small volumes are traded, or bid-ask spreads are very wide. Determining whether a market is active involves judgment.

Measurements of fair value of financial instruments without an active market are based on valuation technique or quoted price from a competitor. Fair value, measured by using valuation technique that can be extrapolated from either similar financial instruments or discounted cash flow method or other valuation techniques, including models, is calculated based on available market data at the reporting date. For example, yield curve of Taipei Exchange and average interest rate of commercial paper quoted by Reuters.

$3)$ Transfers between Level 1 and Level 2

There is no transfer for the years ended December 31, 2019 and 2018.

$4)$ Reconciliation of Level 3 fair values

	Fair value through other comprehensive income
		Unquoted equity
Opening balance, January 1, 2019	\$	instruments 181,577
Total gains and losses recognized
Other comprehensive income		(7, 872)
Reclassification		228,424
Capital reduction by cash		(3, 475)
Disposal/Redemption		(2, 493)
Ending Balance, December 31, 2019	S	396,161
Opening balance, January 1, 2018	S	117,264
Total gains and losses recognized
Other comprehensive income		(5,050)
Settlement and disposal		(6,253)
Purchase		71,690
Adjustments due to IFRS9		3,926
Ending Balance, December 31, 2018	S	181,577

Above-mentioned total gains and losses were included in unrealized gains and losses from financial assets at fair value through other comprehensive income. Among those related to the assets still held on December 31, 2019 and 2018 were as follows:

	For the years ended December 31
	2019	2018
Total gains and losses recognized:
In other comprehensive income, and presented in "unrealized gains and losses from financial assets at fair value through other comprehensive income"	(7, 872)	(5,050)

In other comprehensive income, and presented in "unrealized gains and losses from financial assets at fair value through other comprehensive income"

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

The Company's financial instruments that use Level 3 inputs to measure fair value include financial assets measured at fair value through profit or loss-equity investments.

The Company's equity investments without an active market which are classified as Level 3 have numerous unobservable inputs. The significant unobservable inputs of equity instrument investments are not correlated to each other.

Quantified information of significant unobservable inputs was as follows:

Item	Valuation technique	Significant unobservable inputs	inuvi Tvinuviisiilp between significant unobservable inputs and fair value measurement
Financial assets at fair value through other comprehensive income - equity investments without an active market	Market approach (Comparable listed company method	· Price to book ratio $(0.49~1.41$ and $0.72~1.42$ as of December 31, 2019 and 2018)	· The fair value would increase if price to book ratio increase value would $\cdot$ The fair
		$\leq$ Lack of market liquidity discount $(10\%~30\%$ and $10\% \sim 30\%$ as of December 31, 2019 and 2018)	if decrease lack - of market liquidity discount increase

6) Fair value measurements in Level $3$ – sensitivity analysis of reasonably possible alternative assumptions

The fair value measurement of financial instruments by the Company is reasonable, but the use of different evaluation models or evaluation parameters may result in different evaluation results. For financial instruments classified as Level 3, if the price to book ratio or liquidity discount changes by 10%, the other comprehensive gains and losses for the period will decrease or increase by \$959 thousand and \$1,098 thousand, respectively.

The favorable and unfavorable changes of the Company refer to the fluctuation of fair value, and the fair value is calculated by valuation techniques based on the unobservable input parameters of different degrees.

$(z)$ Financial risk management
$(i)$ Overview

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

$\left| \right|$ credit risk
2) liquidity risk
$3)$ market risk

The following likewise discusses the Company's objectives, policies and processes for measuring and managing the above mentioned risks. For more disclosures about the quantitative effects of these risks exposures, please refer to the respective notes in the accompanying consolidated financial statements.

Structure of risk management $(ii)$

The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. The financial department of the Company provides services and coordinates the operation of the financial market. And the important activities are subject to

Inter-relationshin

the Board of Directors' approval. The Company must be abided by the financial risk management and operation. Internal Audit undertakes reviews of risk management controls and procedures, the results of which are reported to the Board of Directors regularly.

(iii) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company's receivables from customers and investments in debt securities.

1) Accounts receivable and other receivable

The financial department has established a credit policy. Under the policy each new customer is analyzed individually for credit worthiness before payment and delivery terms are offered. The Company's review includes external ratings, when available, and bank references. Purchase limits are established for each customer and represent the maximum open amounts without requiring approval from the financial department; these limits are reviewed quarterly. Customers that fail to meet the Company's benchmark creditworthiness may transact with the Company only on a prepayment basis.

The Company's customers include many types and from many regions. In order to reduce credit risk, the Company reviews financial statuses and collectible of accounts receivable of each customer regularly and accounts loss allowance.

The Company has allowance for impairment losses account to reflect the estimated loss of account receivable and other receivables. The main components of the allowance account include specific loss components related to individual significant risks, and combined loss components established for similar asset groups that have occurred but have not yet been identified. Portfolio loss allowance accounts are determined based on historical payment statistics for similar financial assets.

Investments $2)$

The credit risk resulted from bank deposits, fixed income investments, and other financial instruments is measured and monitored by the Company's finance department. The Company only transacts with financial institutions with good credit rating. The Company does not centralized its investments on specific counterparties hence there is no significant credit risk arising therefrom.

(iv) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company's approach to managing liquidity is to ensure, as far as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.

The Company manages sufficient cash and cash equivalents so as to cope with its operations and mitigate the effects of fluctuations in cash flows. The Company's management supervises the banking facilities and ensures compliance with the terms of loan agreements.

Market risk $(v)$

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

$1)$ Currency risk

The Company is exposed to currency risk on sales and purchases are denominated in a currency other than the respective functional currency of the Company. The currency used in these transactions is USD. The Company adopts a natural hedging strategy. When the net assets and liabilities imbalances occur in the short-term, the Company buys or sells foreign currencies to maintain exposures at an acceptable level.

$2)$ Interest rate risk

Interest rate risk is the risk of changes in the fair value of financial instruments caused by changes in market interest rates or the risk of changes in cash flows of financial instruments caused by changes in market interest rates. The interest rate risk of the financial assets and liabilities is described in the note of liquidity risk management.

$3)$ Other market price risk

The Company is exposed to equity price risk due to the investments in equity securities. The Company actively monitors the performance of this investment portfolios using fair value basis. This is a strategic investment and is not held for trading. The Company does not actively trade in these investments.

(aa) Capital management

The Company plan the capital which need in the future (including research and development costs and repayment) based on the characteristics of operating and development, and considering factors such as changes in the external environment to protect sustainable development of the Company, give back to shareowners and maintain the best structure to enhance value. Overall, the Company adopts a prudent risk management strategy.

(ab) Investing and financing activities not affecting current cash flows

There is no non-cash investing activities for the years ended December 31, 2019 and 2018.

Reconciliation of liabilities arising from financing activities in 2019 was as follows:

			TIQU-LAGU LUGUZLO
	January 1,		Lease	Lease	December
	2019	Cash flows	modification	additions	. 2019 31.
Lease liabilities	55,022	.11,083	(41.089)	10.174	13.024

Non-cosh changes

(ac) Operating lease

$(i)$ Leases as lessee

Non-cancellable operating lease rentals payable were as follows:

	December 31, 2018
Less than one year	12,000
Between one and five years	39,725
	51,725

(7) Related-party transactions

(a) Names and relationship with related parties

Name of related party	Relationship with the Company
Zung-Fu Co., Ltd.	Subsidiary
YSIC Ltd.	Subsidiary
Yuan-Shin Materials Technology Co., Ltd.	Subsidiary
Yangmingshan Tien Lai Resort & SPA	Subsidiary
Asia Carbons & Technology Inc.	Subsidiary
Gvision-USA, Inc.	An associate (A subsidiary before May 21, 2019)
Wonderland Enterprise Co., Ltd.	An associate
Yuan-Yao Development Co., Ltd	An associate
Globaltop Technology Inc.	Subsidiary of an associate

(b) Significant transactions with related parties

$(i)$ Receivables from related parties

The amounts of receivables from related parties were as follows:

Accounts	Types of	December 31,	December 31,
	related parties	2019	2018
Other receivables	Asia Carbons & Technology Inc.	$\overline{\phantom{0}}$	19.046

(ii) Payables to related parties

The amounts of payables to related parties were as follows:

	Types of	December 31,	December 31,
Accounts	related parties	2019	2018
Other accounts payables	Asia Carbons &
	Technology Inc.	$\blacksquare$	5.129

(iii) Deposit received

The deposit received from related parties were as follows:

	December 31, 2019	December 31, 2018
Asia Carbons & Technology Inc.	$\blacksquare$	.140
(iv) Rental income

	For the years ended December 31
	2019	2018
Asia Carbons & Technology Inc.	1,636	6.546
Other related parties	48
	1.684	6.546

(v) Operating expense

The Company engaged a related party in a R&D program of boron nitride. The amounts of expenses were as follows:

		For the years ended December 31
	2019	2018
Asia Carbons & Technology Inc.	426	746

(vi) Property transactions

$1)$ Disposals of property, plant and equipment

The disposals of property, plant and equipment to related parities are summarized as follow:

	For the years ended December 31
	2019		2018
		Gain (loss)		Gain (loss)
Related parties	Disposal price	from disposal	Disposal price	from disposal
Globaltop Technology Inc. \$	3.301	892

Acquisition of Financial assets $2)$

The acquisition of financial assets from related parties are summarized as follows:

	For the years ended December 31
			2019				2018
Related parties	Account	Number of shares	Purpose		Acquisiti on price	Number of shares	Purpose	Acquisiti on price
YSIC Ltd.	Current financial assets at fair value through other comprehensive income			S		3.400.000	Universal Venture Capital Investment Corporation	62,992
YSIC Ltd.	Current financial assets at fair value through other comprehensive income					990,000	Euroc III Venture Capical Corp.	8.698
								71,690

$3)$ Disposals of securities

The disposals of financial assets to related parties are summarized as follows:

				For the years ended December 31
		2019					2018
Relationship	Account	Number of shares Purpose	Disposal price	Gain (loss) on disposal	Number of shares	Purpose	Disposal price	Gain (loss) on disposal
Wonderland Enterprise Co., Ltd.	Investment accounted for using equity method	1,200,000 Yuan-Yao Development Co., Ltd	41,568 S.	2,682			-
Yuan-Yao Developm ent Co., Ltd	Current financial assets at fair value through profit or loss	293.333 Taiwan Insulation Material Industrial Company Ltd.	2.493	٠
			44,061 S	2,682

(c) Key management personnel compensation

	For the years ended December 31
	2019	2018
Short-term employee benefits	23,383	22,566
Post-employment benefits	695	389
	24,078	22,955

Short-term employee benefits include the estimated employee compensation. Please refer to note $6(x)$ for the estimated method.

(8) Pledged assets

The carrying amounts of pledged assets were as follows:

		December 31.	December 31.
Pledged assets	Object	2019	2018
Land, buildings and structures	Borrowings		,797,054

(9) Commitments and contingencies:

(a) Letter of credit issued but not expired

	December 31, 2019	December 31, 2018
Letter of credit outstanding for the import of raw materials	\$ 969,835	1,067,148
	(including USD807)	(including USD117)
	thousand and	thousand and
	EUR317 thousand)	EUR1,550
		thousand)

(10) Losses due to major disasters: None.

(11) Subsequent events: None.

$(12)$ Others:

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

	For the years ended December 31
By Function		2019			2018
	Operating	Operating		Operating	Operating
By item	cost	expense	Total	cost	expense	Total
Employee benefits
Salary	206,909	65,455	272,364	228,753	100,257	329,010
Labor and health insurance	15,231	1,633	16,864	14,701	1,613	16,314
Pension	8,128	2,429	10,557	9,711	2,706	12,417
Remuneration of directors		25,712	25,712		39,834	39,834
Others	7,622	13,955	21,577	6,777	16,689	23,466
Depreciation	191,812	18,727	210,539	185,376	8,092	193,468
Amortization	2,031	167	2,198	57,085	905	57,990

The information about employees and salary of the Company for the years ended December 31, 2019 and 2018 are as below:

	For the years ended December 31
	2019	2018
Employees	209	218
Non-employee directors
Average employee benefits	1,623	1,815
Average salary	1,376	1,567
Average salary adjustment	$(12.19)\%$

(13) Other disclosures items:

Information on significant transactions $(a)$

The following is the information on significant transactions required by the "Regulations Governing the Preparation of Financial Reports by Securities Issuers" for the Company for the year ended December 31, 2019:

$(i)$ Lending to other parties:

															(In Thousands of New Taiwan Dollars)
Number (Note 1)	Name of lender	Name of borrower	Account name	Related party	Highest balance during the period	Ending balance	Actual usage amount during the period	Range of during the period	interest rates Purposes of financing (Note 2)	Transaction amount for business between two parties	Reasons for short-term financine	Allowance for bad debt	Item	Collateral Value	Individual funding loan limit of fund limits (Note3)	Maximum financing (Note 3)
$\circ$	The Company Asia Carbons Cther	& Technologyreceivables Inc.		Yes	24,140	٠	$\overline{\phantom{a}}$	3%	2	$\bullet$	Working capital			$\blacksquare$	702,205	1,404,410
$\mathbf{o}$		The Company Asia Carbons Other & Technologyreceivables Inc.		Yes	35,000		$\overline{\phantom{0}}$	2%	$\overline{2}$	٠	Working capital		$\sim$	$\blacksquare$	702,205	1,404,410
	Kun Shan Yu-Kun Shan Technology Education Consulting Co., Ltd.	Globaltop Trading Co. Ltd.	Other receivables	Yes	13,731			3.3%	$\overline{\mathbf{2}}$	$\sim$	Working capital		٠	$\cdot$	28,951	57,902
$\overline{2}$	YSIC Ltd.	Asia Carbons Other & Technologyreceivables Нc.		Yes	30,000	٠		3%	2	$\sim$	Working capital	۰		$\overline{\phantom{a}}$	147,194	294,387

Note 1: The description of the number column is as follows:

Note 1: The description of the number column is as follows:
(1) Issues fills in 0.
(2) The investees are numbered sequentially by the Arabic number 1.
(2) The investees are numbered sequentially by the Arabic number 1.
Not

(ii) Guarantees and endorsements for other parties: None.
(iii) Information regarding securities held at the reporting day (excluding investment in subsidiaries, associates and joint ventures):

						Ending balance
Name of holder	Category and name of security	Relationship with the security issuer	Account	Shares		Percentage of Carrying value owncrship (%)	Fair value	Note
The Company	E Ink Holdings Inc.		Current financial assets at fair value through profit or loss	400,000	12,500	0.04%	12,500
The Company	Test Research, Inc.		Current financial assets at fair value through profit or loss	500,000	26,600	0.21%	26,600
The Company	Iniversal Venture Capital Investment Corporation		Non-current investment in equity linstrument at FVOCI	8,400,000	56,445	6.98 %	56,445
The Company	Euroc Venture Capital Corp.		Non-current investment in equity instrument at FVOC!	290,928	4,192	2.38 %	4,192
The Company	Έuroc ΠΙ Venture Capical Corp.		Non-current investment in equity instrument at FVOCI	259,875	3,272	5.00 %	3,272
The Company	Global Investment Holding Co., Ltd	$\tilde{\phantom{a}}$	Non-current investment in equity instrument at FVOCI	10,901,520	80,605	5.75%	80,605
The Company	Faith Alliance Corporation	$\overline{\phantom{a}}$	Non-current investment in equity instrument at FVOCI	25,720	108	$0.06\%$	108
The Company	Multilayer P. C. B. & Assembly Manufacturer		Non-current investment in equity linstrument at FVOCI	912	20	0.01%	20
The Company	Leadwell Cnc Machines MfgCorp.		Non-current investment in equity instrument at FVOCI	37,352	867	0.06%	867
The Company	Crownpo Technology Inc.	٠	Non-current investment in equity instrument at FVOCI	709	19	0.01%	19
The Company	Infomedia Inc.	٠	Non-current investment in equity linstrument at FVOCI	200,000	179	0.11%	179
The Company	Vxis Technology Corp.		Non-current investment in equity linstrument at FVOCI	72,480	613	0.61%	613

						Ending balance
Name of holder	Category and name of security	Relationship with the security issuer	Account	Shares	Carrying value	Percentage of ownership (%)	Fair value	Note
The Company	Asia Global Venture Capital II Co., Ltd		Non-current investment in equity instrument at FVOCI	1,000,000	21,417	10.00 %	21,417
The Company	Shieh-Tai Biochemical Technology Co., Ltd		Non-current investment in equity instrument at FVOCI	120,339		$0.32 \%$	$\overline{\phantom{a}}$
The Company	Lof Solar Corp.	$\blacksquare$	Non-current investment in equity instrument at FVOCI	2,000,000	$\overline{\phantom{a}}$	4.48 %	$\blacksquare$
The Company	Yuan-Jie Investment Co., Ltd.		Non-current investment in equity instrument at FVOCI	21,000.000	228.424	19.09%	228,424
Zung-Fu Co., Ltd.	Lidien Inc.	ä,	Non-current investment in equity instrument at FVOCI	760,000	11,373	19.00 %	11,373
Zung-Fu Co., Ltd.	Deng Yun Co., Ltd	$\blacksquare$	Non-current investment in equity instrument at FVOCI	591,945	14,025	3.09%	14,025
Zung-Fu Co., Ltd.	YuChie Inc.	÷,	Non-current investment in equity instrument at FVOCI	589,000	6,880	19.00 %	6,880
YSIC Ltd.	Ardentec Corporation	$\overline{a}$	Current financial assets at fair value through profit or loss	600,000	18,510	0.12%	18,510
YSIC Ltd.	Leo Systems, Inc.	÷.	Current financial assets at fair value through profit or loss	100,000	2,015	0.12%	2,015
YSIC Ltd.	Co-Tech Development Corp.	$\overline{a}$	Current financial assets at fair value through profit or loss	200,000	8,510	0.08%	8.510
YSIC Ltd.	Phison Electronics Corp.	ä,	Current financial assets at fair value through profit or loss	20,000	6,810	0.01%	6.810
YSIC Ltd.	Topco Scientific Co., Ltd.	ä,	Current financial assets at fair value through profit or loss	110,000	11,605	0.06 %	11,605
YSIC Ltd.	Unicon Optical Co., Ltd.	$\blacksquare$	Current financial assets at fair value through profit or loss	1,500,000	53,235	0.88%	53,235
YSIC Ltd.	Avalue Technology Inc.	ä,	Current financial assets at fair value through profit or loss	250,000	19,100	0.36 %	19,100
YSIC Ltd.	Symtek Automation Asia Co., Ltd.	L.	Current financial assets at fair value through profit or loss	20,000	1,550	$0.03\%$	1,550
YSIC Ltd.	Nan Ya Printed Circuit Board Corporation		Current financial assets at fair value through profit or loss	50,000	2,298	0.01%	2,298
YSIC Ltd.	Materials Analysis Technology Inc.	i.	Current financial assets at fair value through profit or loss	5,000	407	0.01%	407
YSIC Ltd.	International Games System Co., Ltd.	$\blacksquare$	Current financial assets at fair value through profit or loss	10,000	3,900	0.01%	3,900
YSIC Ltd.	Metatech (AP) Inc.	$\overline{\phantom{a}}$	Current financial assets at fair value through profit or loss	20,000	1,110	0.03%	1,110
YSIC Ltd.	Globalwafers Co., Ltd.	÷,	Current financial assets at fair value through profit or loss	30,000	11,475	0.01%	11,475
YSIC Ltd.	Shin Kong Chi- Shin Money- Market Fund	$\blacksquare$	Current financial assets at fair value through profit or loss	1,138,166	17,691	$\%$ $\overline{\phantom{a}}$	17,691
YSIC Ltd.	Prudential Fincl US Inv Grd Corp	٠	Current financial assets at fair value through profit or loss	600,000	5,754	% $\blacksquare$	5,754
YSIC Ltd.	Cjw International Co., Ltd.		Non-current investment in equity instrument at FVOCI	1,000,000	13,650	0.72 %	13,650
YSIC Ltd.	Mcm Stamping Co., Ltd.	$\frac{1}{2}$	Non-current investment in equity instrument at FVOCI	200,000	391	0.63%	391
YSIC Ltd.	Vxis Technology Corp.	$\blacksquare$	Non-current investment in equity instrument at FVOCI	72,480	617	0.61%	617
YSIC Ltd.	Infomedia Inc.	$\blacksquare$	Non-current investment in equity instrument at FVOCI	650,000	579	0.35%	579
YSIC Ltd.	Yuan Jie Investment Co., Ltd.	$\mathbf{L}$	Non-current investment in equity instrument at FVOCI	100,000	1,088	$0.09 \%$	1,088
GRAND CAPITALCO., Ltd	Deng Yun Co., Ltd	$\overline{\phantom{a}}$	Non-current investment in equity instrument at FVOCI	3,082,453	73,033	16.10 %	73,033

(iv) Information regarding purchase or sale of securities for the period exceeding NTD300 million or 20% of the Company's paid-in capital: None

(v) Information on acquisition of real estate with purchase amount exceeding NTD300 million or 20% of the Company's paid-in capital: None
(vi) Information regarding receivables from disposal of real estate exceeding NTD300 million or 20% of the Company's paid-in capital: None
(vii) Information regarding related-parties purchases and/or sales exceeding NTD100 million or 20% of the Company's paid-in capital: None
(viii) Information regarding receivables from related-parties exceeding NTD100 million or 20% of the Company's paid-in capital: None
(ix) Information regarding trading in derivative financial instruments: None
Information on investees: $(b)$

The following is the information on investees for the years ended December 31, 2019 (excluding information on investees in Mainland China);

										(In Thousands of New Taiwan Dollars)
			Main		Original investment amount		Balance as of December 31, 2019		Net income	Share of
Name of investor	Name of investee	Location	businesses and products	December 31, 2019	December 31, 2018	Shares	Percentage of ownership	Carrying value	(losses) of investee	profits/losses of investee	Note
The Company	Grand Carhay Venture Capital Co., Ltd.	Taiwan	Investment business	400,000	400,000	40,000,000	25.00%	331,171	(698)	(175)
The Company	Wonderland Enterprise Co., Ltd	Taiwan	General investment business	325,230	325,230	29,629,597	37.04%	540,896	94,305	34,527
The Company	Yuan-Jie Investment Co., Ltd.	Taiwan	General investment business	209,896	209,896		%	$\overline{\phantom{a}}$	133,494	43,129
The Company	Yu-Jie Investment Co., Ltd.	Taiwan	General investment business	223,539	223,539	21,320,000	32.80%	266,507	104,903	34,408
The Company	Yuan-Yao Development Co. лd.	Taiwan	General investment business		55,305				(1,653)	(549)
The Company	Taiwan United Medical Inc.	Taiwan	Wholesale and Retail of Precision Instruments and Information Software		229,364		%	÷,	73	47	Subsidiary
The Company	Zune-Fu Co., Ltd.	Taiwan	Building cleaning and naintenance, Sewage reatment, Air conditioning equipment maintenance	522,032	522,032	22,289,256	89.16%	103,787	(14, 469)	(11, 470)	Subsidiary
The Company	YSIC Ltd.	Taiwan	Residential building and industrial plant development rental business	1,638,164	1,638,164	103,975,894	99.99%	731,635	(185, 507)	(184, 285)	Subsidiary
The Company	Yuan-Shin Materials Technology Corp. Ltd	Taiwan	Basic precision chemical naterials and plastic raw material manufacturing	145,900	145,900	5,000,000	100,00 %	41,607	(1,045)	(1,045)	Subsidiary
The Company	Yangmingshan Tien Lai Resort & SPA	Taiwan	General hotel industry	630,555	630,555	25,865,618	65.07%	694,989	24,174	13,417	Subsidiary
The Company	Gvision-USA, Inc.	USA	Sale and distribution of liquid crystal displays	56,266	56,266	666,667	44.44 %	ä,	2,936	3,474	Subsidiary
The Company	Gvision-USA, Inc.	USA	Sale and distribution of liquid trystal displays:	56,266	56,266	666,667	44.44 %	37,117	608	(1,627)
The Company	Jing-Shou Engineering Co., Ltd.	Taiwar.	Bridge and building engineering	٠	187,000	٠	%	÷,	(1, 301)	(1, 296)	Subsidiary
The Company	Lei-Ting Construction Corporation	Taiwan	Operating civil and construction engineering husiness	71,383	41,060	6,306,400	91.40%	41,119	(3, 335)	(1, 759)	Subsidiary
The Company	Asia Carbon & Technology Inc.	Taiwan	Electronic component manufacturing	291,064	192,400	9,866,389	98.58%	10,209	(81,682)		$(57,647)$ Subsidiary
Zung-Fu Co., Ltd.	Grand Captial Co., Ltd.	Seychelles	General investment business	2,500	2,500	75,098	2.78%	2,092	(74)	(2)	Subsidiary
Zung-Fu Co., Ltd.	Globaltop Technology Inc.	Taiwan	GPS Module, GPS HandheldSystem and GPS Antenna.	20,000	20,000	876,554	4.17%	7,195	(33, 583)	(1, 402)
Zung Fu Co., Ltd.	Asia Carbon & Technology Inc.	Taiwan	Electronic componentmanufacturing	115,850	115,850	ä,	%	$\blacksquare$	(81, 682)	÷.	Subsidiary
YSIC Ltd.	Kun Shan Internation! Ltd.	Seychelles	General investment business	122,572	122,572	3,702,718	62.03%	131,665	2,132	1.322	Subsidiary
YSIC Ltd.	Grand Captial Co., Ltd.	Seychelles	General investment business	88,090	88,090	2,622,904	97.22%	73,082	(74)	(72)	Subsidiary
YSIC Ltd.	Yangmingshan Tien Lai Resort & SPA	Taiwan	General hotel industry	110.836	110,836	4,807,774	12.10%	118,706	24,174	2,564	Subsidiary
YSIC Ltd.	Globaltop Technology Inc.	Taiwan	GPS Module, GPS Handheld System and GPS Antenna	155,449	155,449	7,086,249	33 74 %	58,162	(33, 583)	(11, 332)
YSIC Ltd.	Lei-Ting Construction Corporation	Taiwan	Operating civil and construction engineering business	99,380	99,380	593,600	8.60%	3,870	(3, 335)	(1, 308)	Subsidiary
YSIC Ltd.	l'ien Lai Co., Ltd.	Taiwan	Piping engineering	5,000	5,000	500,000	50.00%	2,044	(988	(494)	Subsidiary
YSIC Ltd.	Yuan-Jie Investment Co., Ltd.	Taiwan	General investment business	1,000	1,000		$\%$		133,494	205

(Continued)

			Main		Original investment amount		Balance as of December 31, 2019		Net income	Share of
Name of investor	Name of investee	Location	businesses and products	2019	December 31, December 31, 2018	Shares	Percentage of ownership	Carrying value	(losses) of investee	profits/losses of investee	Note
YSIC Ltd.	Yu-Jie Investment Co., Ltd.	Taiwan	General investment business	1,000	1.000	103,000	0.16%	1,287	104,903	166
YSIC Ltd.	Asia Carbon & Technology nc.	Taiwan	Electronic component manufacturing	77,917	77,917	$\hat{\phantom{a}}$	$\mathbf{0}_{\alpha}$	$\overline{\phantom{0}}$	(81, 682)	(3,227)	Subsidiary
Lei-Ting Construction Corporation	Zung-Fu Co., Ltd.	Taiwan	Building cleaning and maintenance, Sewage treatment, Air conditioning equipment maintenance	59,670	59,670	2,461,351	9.85%	11,461	(14, 469)	(1, 425)	Subsidiary
Jing Shuo Engineering Co., Ltd.	Asia Carbon & Technology nc.	Taiwan	Electronic component manufacturing	13,855	13,855			$\overline{\phantom{a}}$	(81, 682)	(940)	Subsidiary
Asia Carbon & Technology Inc.	Asia Graphene Co., Ltd.	Taiwan	Electronic component manufacturing		1,000		$\sim$		(40)	(40)	Subsidiary
Yangmingshan Tien Lai Resort & SPA	Yangmingshan Tien Lai Art Taiwan Village Development Co., Ltd.		Arts and cultural services and other leisure services		1,680		$\overline{\phantom{a}}$	$\overline{\phantom{a}}$	(55)	(55)	Subsidiary

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

Name of	Main businesses and	Total amount of paid in	Method of	Accumulated outflow of linvestment froml Taiwan as of	Investment flows	Accumulated outflow of investment from Taiwan as of	Net income (losses) of the	of	Percentage Investment income	Book	Accumulated remittance of earnings in
investee	products	capital	investment (Note 1)	January 1, 2019 Outflow	Inflow	December 31. 2019	(Note 2)	investee ownership	(losses)	value	current period
Kun Shan Yu-Fu Technology Education Consuting Co., Ltd.	Educational consulting, information operation consulting, software and data storage consultation	103,984 (USD 3.468)	(2)	109,427 (USD 3.650)		109,427 (USD 3,650)	4,374 (USD 142)	62.03%		2,713 89,367
Kun Shan Jia-An Technology Education Consuting Co., Ltd.	Educational consulting, information operation consulting, software and data storage consultation	72,899 (USD 2.432)	(2)	(Note 4)			(2,117) $(USD - 69)$	62.03%		$(1,313)$ 40,857

Note1: The investment methods are divided into the following three types: (1) Direct investment in Mainland China. (2) Indirect investment in Mainland China through a holding company established in other countries. (3) Others.

Note2: The investment income (losses) recognized in the current period were calculated based on the financial statements that have not been reviewed.

Note3: The foreign currency transactions have been translated into New Taiwan Dollar at the exchange rate at the end of the financial reporting date and the average exchange rate (USD1=NTD29.98, USD1=NTD30.8906).

Note4: Kun Shan Yu-Fu Technology Education Consulting Co., Ltd. had been spinned-off as Kun Shan Yu-Fu Technology Education Consulting Co., Ltd. and Kun Shan Jia-An Technology Education Consulting Co., Ltd. and Kun Shan

(ii) Upper limit on investment in Mainland China:

Accumulated Investment in Mainland China as of December 31, 2019	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment (Note)
109.427	109.427	441.581
(USD 3,650)	(USD 3,650)

Note: The investment limit was calculated based on the official document 09704604680 announced by the MOEAIC on August 29, 2008.

(iii) Significant inter-company transactions with the subsidiary in Mainland China: None.

(In Thousands of New Taiwan Dollars)

(14) Segment information:

The Company has provided the operating segments disclosure in the consolidated financial statements.

Statement of Cash and Cash Equivalents

December 31, 2019

(Expressed in Thousands of New Taiwan Dollars)

Item	Description		Amount
Petty cash		\$	160
Deposits in bank	Demand deposits in NTD		532,792
Deposits in bank	Demand deposits in USD817@ 29.98		24,489
Bonds under resell agreements	Due on 2020.1.15, interest rates at 0.54~0.55%		600,000
Time deposits due within one year	Time deposits in USD1,817 $@$ 29.98,
	due from $2020.1.3$ to $2020.1.13$ interest rates at		54,461
	$1.65\% \sim 2.30\%$
Total		S	1,211,902

Statement of Financial Assets Measured at Fair Value through Profit or Loss - Current

December 31, 2019

(Expressed in Thousands of New Taiwan Dollars)

	Beginning balance		Addition		Decrease		Ending balance
									Accumulated
Name of investee	Shares		Shares	Amount	Shares	Amount	Shares	Amount	impairment	Collateral	Note
E Ink Holdings Inc.	$1,000,000 \overline{\$}$	$\frac{\text{Amount}}{30,150}$			600,000	20,77	400,000	12,500		Ξ
China Steel Chemical Corporation	300,000	41,100			300,000	38,178				Ξ
Test Research, Inc.	600,000	27,360			100,000	5,395	500,000	26,600		乭
Yageo Corporation			3,000	1,100	3,000	1,057				云
Walsin Technology Corporation			6,000	1,184	6,000	1,096				Ξ
The Shanghai Commercial & Savings Bank, Ltd.			.1,000	477	11,000	497				乭
LandMark Optoelectronics Corporation			$7,000$	1,935	7,000	2,129				云
Taiwan Paiho Limited			15,000	1,034	15,000	965				三
Nan Pao Resins Chemical Co., Ltd.			4,000	472	4,000	500				宮
Longwell Company			25,000	141	25,000	.134				运
Apogee Optocom Co., Ltd.			6,000	506	6,000	$\overline{51}$				宮
Tai-Sol Electronic Co., Ltd.			31,000	1,061	31,000	,102				三
Taiwan Surface Mounting Technology Corp.			10,000	458	10,000	505				Ξ
Swancor Holding Co., Ltd.			8,000	786	8,000	760				写
CSBC Corporation, Taiwan			38,000	1,066	38,000	,086				Ë
Yeong Guan Holdings Co., Limited Taiwan			0.000	697	10,000	654				$\overline{\overline{z}}$
Branch (B.V.I)
Primax Electronics Ltd.			7,000	406	$7{,}000$	405				三
Career Technology MFG. Co., Ltd.	200,000	5.210		۱	200,000	7,625		t.		运
		103,820		1,323		84,376		39,100

$~100~$

Statement of Accounts Receivable

December 31, 2019

(Expressed in Thousands of New Taiwan Dollars)

Client Name	Description	Amount	Note
Non-related parties:
Company A	Payment for goods	\$ 421,540
Company B	$^{\dagger}$	118,068
Company C	$\boldsymbol{\mathsf{H}}$	82,668
Company D	$\mathbf{H}$	57,188
Company E	$\mathbf{H}$	44,736
Others	Ħ	91,873	Note
Less: Loss allowance		(41)
Total		816,032
Note: The amount of individual alignt in others does not avecoed $50/$ of the account belonger

Note: The amount of individual client in others does not exceed 5% of the account balance.

Statement of Inventories

			Amount
Item Finished goods	Description SM and PDEB	Cost \$ 194,549	Net realizable value 214,521	Note
By-product	Toluene	3,604	3,579
Semi-finished products	Ethylbenzene	52,523	85,805
Work in progress	Ethylbenzene	42.147	39,264
Raw materials	Benzene, Ethylene	101,435	89,012
Supplies	Energy, Chemicals	57,811	57,457
Less: Allowance for inventory decline in value		(24, 504)	489,638
		S 427,565

Note: Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs incurred upon completion and selling expenses.

֧֧֧֧֧֦֧֧֧֦֧֦֧֦֧֧֧֧֧֧֚֚֚֚֝֟֓֝֓֓֓֓֓֓֝֓֝֓֝֓֓֝֓֓֓֓֓֓֓֓ j ーーーーーー
$\frac{1}{2}$ Service Service i, $\frac{1}{2}$

֕

֖֖֖ׅ֖֖֚֚֚֚֚֚֚֚֚֚֚֚֚֚֚֚֚֚֚֚֚֡֝֡֡֡֡֡֡֡֡֬֝

Statement of Changes in Financial Assets Measured at Fair Value through Other Comprehensive Income - Non-current

For the year ended December 31, 2019

(Expressed in Thousands of New Taiwan Dollars)

	Beginning balance		Addition		Decrease		Ending balance
				Amount		Amount			Accumulated
Name of investee	Shares	Amount	Shares	(Note l )	Shares	(Note2)	Shares	Fair Value	impairment	Collateral	Note
Universal Venture Capital Investment Corporation	8,400,000 \$	60,156				3,710	8,400,000	56,445	≨
Euroc Venture Capital Corp.	501,600	4,572		717	210,672	1,097	290,928	4,192
Euroc III Venture Capical Corp.	742,500	6,033			482,625	2,761	259,875	3,272	$\mathbb{A}$
Global Investment Holding Co., Ltd	10,901,520	81,336				731	10,901,520	80,605	$\boldsymbol{\Sigma}$
Faith Alliance Corporation	25,720	167				$\mathcal{E}$	25,720	108
Multilayer P. C. B. & Assembly Manufacturer	912	$\frac{8}{18}$					912		Z Z Z
Leadwell Cnc Machines Mfg., Corp.	37,352	806					37,352	867
Crownpo Technology Inc.	709	$\Xi$					709		$\sum_{i=1}^{n}$	豆
Infomedia Inc.	200,000	196					200,000	179	$\stackrel{\prec}{\geq} \stackrel{\prec}{\geq} \stackrel{\prec}{\geq}$	$\overline{z}$
Vxis Technology Corp.	72,480	393		$\frac{20}{3}$			72,480	613		$\overline{\Xi}$
Asia Global Venture Capital II Co., Ltd	293,333	1,644		940	293,333	2,584	,			园
Asia Global Venture Capital II Co., Ltd.	1,000,000	26,143				4,727	1,000,000	21,417	Ź	Ë
Shieh-Tai Biochemical
Technology Co., Ltd	120,339						120,339		$\mathbf{A}$	Ξ
Lof Solar Corp.	2,000,000						2,000,000		$\mathbb{X}$	丟
Yuan-Jie Investment Co., Ltd.		t,	000,000 $\vec{c}$	228,42			21,000,000	228,42	$\mathbb{X}$	Ξ
		181,577				15,728		396,16

Note2: The amount of decrease included disposal of financial assets measured at fair value through other comprehensive income (\$2,493) thousand, capital reduction in returns of cash (\$3,475) thousand, Note1: The amount of addition included reclassified from investments accounted for using the equity method \$228,424 thousand and gain on financial assets at fair value \$1,888 thousand. and loss on financial assets at fair value (\$9,760) thousand.

$~10$

Statement of Changes in Investments Accounted for Using the Equity Method

For the year ended December 31, 2019

(Expressed in Thousands of New Taiwan Dollars)

											Market Value or Net
	Beginning balance		Addition (Note1)		Decrease (Note2)			Ending balance			Assets Value
								Percentage			Total
Name of investee	Shares	Amount	Shares		Shares	Amount	Shares	of ownership	Amount	Unit price	amount	Collateral	Note
Lei-Ting Construction Corporation	4,064,400 \$	13,725	4,500,000	$\frac{\text{Amount}}{30,083}$	8,564,400	43,808		℅				Ξ
Yangmingshan Tien Lai Resort & SPA	25,865,618	681,482		3,507			25,865,618	65.07%	694,989		694,989	三
Zung-Fu Co., Ltd.	22,289,256	115,536		8,877		20,626	22,289,256	89.16%	103,787		103,787	Ë
Taiwan United Medical Inc.	14,409,651	65,446		47	14,409,651	65,493		℅				Ξ
Yuan-Shin Materials Technology Corp. Ltd	5,000,000	42,652				1,045	5,000,000	100.00%	41,607		41,607	Ξ
GVISION-USA INC.	666,667	44,453		1,847		9,183	666,667	44.44 %	37,117		37,117	Ξ
Jing-Shou Engineering Co., Ltd.	4,500,000	29,988		1,365	4,500,000	31,353	$\overline{\phantom{a}}$	$\frac{5}{6}$				Ξ
YSIC _Ltd	103,975,894	932,174		4,026		204,565	03,975,894	99.99%	731,635		131,635	Ξ
Wonderland Enterprise Co., Ltd.	29,629,597	626,867		4,621 ب		120,592	29,629,597	37.04 %	540,896		540,896	Ξ
Yuan-Jie Investment Co., Ltd.	21,000,000	224,060		4,598	21,000,000	278,658		$\mathcal{S}_{\mathbf{0}}$				戹
Yu-Jie Investment Co., Ltd.	21,320,000	299,718		4,594		67,805	1,320,000	32.80%	266,507		266,507	戹
Yuan-Yao Development Co., Ltd.	1,200,000	36,335		3,099	1,200,000	39,434		Š,				迃
Grand Carhay Venture Capital Co., Ξ	40,000,000	318,400		12,946		175	10,000,000	25.00%	331,171		331,171	乭
Asia Carbon & Technology Inc.	15,640,000	(7,863)	9,866,389	98,664	5,640,000	80,592	9,866,389	್ಡೆ	10,209		10,209	Ξ
		$S = 3,422,973$		298,274		963,329			2,757,918		2,757,918

Note1: The amount of addition included gain on reversal of impairment loss \$8,766 thousand, investment income \$127,376 thousand, other comprehensive income \$8,087 thousand, addition of investment \$128,720 thousand, and changes in ownership interests in investments \$25,325 thousand.

Note2: The amount of decrease included investment losses (\$258,227) thousand, other comprehensive income (\$151,482) thousand, disposal of investments accounted for using the

equity method and reclassification (\$403,978) thousand, and changes in ownership interests in investments (\$149,642) thousand.

$~1.8$

Statement of Accounts Payables

December 31, 2019

(Expressed in Thousands of New Taiwan Dollars)

Decrease	Amount	Note

	494,219
$\mathbf{H}$	355,526
П	69,989
Ħ	58,471
$^{\prime\prime}$	111,143	Note
	S. 1,089,348
		Payment for goods \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \

Note: The amount of individual vendor in others does not exceed 5% of the account balance.

Statement of Operating Costs

For the year ended December 31, 2019

(Expressed in Thousands of New Taiwan Dollars)

Item		Amount
		Subtotal	Total
Cost of sales from manufacturing
Direct raw materials
Balance at 1 January	\$	181,730
Purchases of raw materials		8,334,544
Balance at 31 December		(101, 435)	8,414,839
Indirect supplies Balance at 1 January		41,190
Purchases of indirect supplies		1,133,870
Less: transfer to other prepayments and other non-current		(85, 466)
assets
Balance at 31 December		(57, 811)	1,031,783
Direct labor			50,631
Manufacturing overhead			721,555
Manufacturing cost			10,218,808
Work-in-process inventory, January 1			278,233
Work-in process inventory, December 31			(94, 670)
Cost of goods manufactured			10,402,371
Finished goods, January 1			143,782
Finished goods, December 31			(198, 153)
Loss for market price decline and obsolete and slow-moving inventories			20,845
Total operating costs			10,368,845

Statement of Selling Expenses

For the year ended December 31, 2019

(Expressed in Thousands of New Taiwan Dollars)

Item	Amount		Note
Export expense	\$	24,911
Shipping expenses		10,052
Salaries		11,189
Others		4,362	Note
Total		50,514

Note: The amount of individual item in others does not exceed 5% of the account balance.

Statement of Administrative Expenses

Item	Amount	Note
Salaries	76,466 \$
Employee welfare	12,105
Depreciation (common parts)	11,433
Entertainment	10,431
Others	30,715 Note
Total	141,150

Note: The amount of individual item in others does not exceed 5% of the account balance.

Statement of Prepayments: Note 6(e) Statement of Changes in Property, Plant and Equipment: Note 6(k) Statement of Changes in Accumulated Depreciation of Property, Plant and Equipment: Note 6(k) Statement of Changes in Right-of-use assets: Note 6(1) Statement of Changes in Accumulated Depreciation of Right-of-use assets: Note 6(1) Statement of Changes in Intangible Assets: Note 6(m) Statement of Deferred Tax Assets: Note 6(s) Statement of Other Non-current Assets: Note 6(n) Statement of Other Payables: Note 6(o) Statement of Lease Liabilities: Note 6(q) Statement of Deferred Tax Liabilities: Note 6(s) Statement of Operating Revenue: Note 6(v) Statement of the Net Amount of Other Revenues (Gains) and Expenses (Losses): Note 6(w) Statement of Finance Costs: Note 6(w) Statement of Current Period Employee Benefits, Depreciation, and Amortization by Function: Note 12

AI assistant

T.S.M.C. — Annual Report 2019

51769_rns_2019-11-01_e930778e-eb73-4e5b-ac04-0861a3eae3eb.pdf

TAIWAN STYRENE MONOMER CORPORATION

Parent Company Only Financial Statements

Table of contents

Independent Auditors' Report

Opinion

Basis for Opinion

Key Audit Matters

Other Matter

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

Auditor's Responsibilities for the Audit of the Parent Company Only Financial Statements

KPMG

Notes to Readers

Balance Sheets

December 31, 2019 and 2018

(English Translation of Financial Statements Originally Issued in Chinese)TAIWAN STYRENE MONOMER CORPORATION

Statements of Comprehensive Income

For the years ended December 31, 2019 and 2018

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

(English Translation of Financial Statements Originally Issued in Chinese)TAIWAN STYRENE MONOMER CORPORATION

For the years ended December 31, 2019 and 2018

(English Translation of Financial Statements Originally Issued in Chinese) TAIWAN STYRENE MONOMER CORPORATION

Notes to the Parent Company Only Financial Statements

For the years ended December 31, 2019 and 2018

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

(1) Company history

(2) Approval date and procedures of the financial statements

(3) New standards, amendments and interpretations adopted

$(4)$ Summary of significant accounting policies

(ii) Functional and presentation currency

Foreign currencies $(c)$

(ii) Foreign operations

Applicable from January 1, 2019

Applicable before December 31, 2018

(m) Intangible assets

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

(6) Explanation of significant accounts

$(b)$ Current financial assets at fair value through profit or loss

(d) Inventories

$(f)$ Non-current assets (or disposal groups) held for sale, net

Subsidiaries $(i)$

$(ii)$ Associates

(k) Property, plant and equipment

Right-of-use assets $(1)$

(m) Intangible assets

Employee benefits $(r)$

Actuarial assumptions $6)$

(iii) Deferred tax assets and liabilities

Ordinary shares $(i)$

(ii) Capital surplus

(iii) Retained earnings

(iv) Other equity

(u) Earning per share

(ii) Diluted earnings per share

(v) Revenue from contracts with customers

$(i)$ Disaggregation of revenue

(w) Non-operating income and expenses

(ii) Other gains and losses

Financial instruments $(y)$

(iii) Market risk

$1)$ Currency risk

$3)$ Other market price risk

(iv) Fair value information

$2)$ Valuation techniques for financial instruments measured at fair value

(iii) Credit risk

Market risk $(v)$

(ac) Operating lease

(7) Related-party transactions

(b) Significant transactions with related parties

(ii) Payables to related parties

(iii) Deposit received

(vi) Property transactions

Acquisition of Financial assets $2)$

$3)$ Disposals of securities

(c) Key management personnel compensation

(8) Pledged assets

(9) Commitments and contingencies:

(10) Losses due to major disasters: None.

T.S.M.C. Annual Report 2019

(English Translation of Financial Statements Originally Issued in Chinese)
TAIWAN STYRENE MONOMER CORPORATION

(English Translation of Financial Statements Originally Issued in Chinese)
TAIWAN STYRENE MONOMER CORPORATION